Pound Remains Strong Ahead of BoE Decision

The British Pound (GBP) has been the strongest G10 currency after the US Dollar (USD) since the Middle East conflict began in late February, according to MUFG's Derek Halpenny.

Attention now shifts to the Bank of England's (BoE) July decision, with expectations that the MPC will remain on hold but with risks tilted higher due to inflation and energy concerns.

Halpenny notes that a September hike is priced at over 50% while a hike is fully priced by November, indicating market confidence in a rate increase.

However, for market rates to move higher and the pound to advance in response to today's meeting, increased conviction on a September rate hike is needed.