GBP declined against most of its major rivals in the European session on Wednesday as investors waited for the rate decisions from world’s major central banks, including the Federal Reserve later in the day and the European Central Bank and Bank of England on Thursday.
According to Reuters poll, market participants expect the BoE to approve a 50-basis-point rate increase at its February. In markets’ views, that might be a penultimate rate hike in the BoE’s current monetary policy tightening cycle, which would lift the British central bank’s benchmark rate to 4.0%. Additional 25-basis-point rate raise in March is anticipated to end the cycle.
If the BoE’s policymakers vote for a smaller-than-forecast rate move tomorrow that would be a surprise for markets and could weigh on the pound.
Another point of interest for investors is the BoE’s updated economic projections as more-resilient-than-expected growth should mean that core inflation might be stickier and pressure the central bank to hike rates a bit more.