BoE Seen on Hold as Risks Linger for British Pound

The British Pound has stabilized at around 1.3326 against the US Dollar as the Bank of England (BoE) is expected to keep interest rates unchanged at 3.75%. According to a Bloomberg poll, all seven analysts surveyed expect the BoE to hold rates steady.

This decision comes amidst twin risks for the Pound: Prime Minister Burnham's debut fiscal plans and the oil price shock. While there are modest upside risks of further tightening due to energy price volatility and elevated services inflation, any move is unlikely to be imminent.

The labour market is gradually loosening, and softer domestic demand should keep the BoE on hold for now. Lee Sue Ann, an economist at UOB, also expects a rate hold in July. However, growing unease within the Monetary Policy Committee (MPC) may lead to a second dissent.