GBP Vulnerable to Dovish Repricing as UK Economy Runs Below Capacity

The British Pound (GBP) is trading heavily near its 200-day moving average at 1.3455 due to concerns over the Bank of England's (BoE) interest rate policy.

Brown Brothers Harriman's Elias Haddad notes that despite the August Consumer Price Index (CPI) slightly exceeding the BoE's projections, he still expects the central bank to keep rates at 3.75% for a sixth straight meeting.

Haddad argues that aggressive market pricing reflects energy shocks and sees Sterling vulnerable to a dovish BoE repricing as the UK economy runs below capacity.