GBPUSD: TP3 Hit +100 Pips (AccuTrade)

GBP-USD edged lower ahead of the BoE meeting. The central bank is widely expected to cut
rates by 25bp with markets expecting a 100% probability of a rate cut. The BoE members are
expected to vote in a 8-1 split with Catherine Mann favoring no change. While the outcome
should not have a material impact for GBP, risks remain that the board members vote for a
unanimous rate cut or there is a vote for a 50bp cut. The central bank is also set to release its
updated forecasts in this meeting (the quarterly Monetary Policy Report (MPR)), and
expectations are for both growth and inflation forecasts to be downgraded given the recent
release of downbeat data – weak growth amid a loosening labor market. If the BoE’s outlook for
the year turns out to be more dovish than expected, we think there is room for markets to price
in more rate cuts for 2025 (currently close to 85bp cuts as per swap market pricing as opposed
to Governor Bailey’s suggestion of 100bp cuts), which could cause yield spreads to work
against GBP.