Pound Steady Amid Expectations of BOE Patience

The British pound has been trading within a narrow range against the US dollar and euro since mid-February 2026, as market participants await key economic releases. MUFG analysts expect the Bank of England to maintain its current policy stance, with upcoming UK CPI and employment data likely to shape the near-term outlook.

According to MUFG's research team, the BoE is likely to keep interest rates unchanged at its next meeting, given mixed signals on inflation and wage growth. While headline CPI has eased, core inflation remains sticky, and the labor market shows signs of cooling but not collapsing.

The market currently prices in a low probability of a rate cut in the first half of 2026, and MUFG aligns with this view. They emphasize that the BoE's communication will focus on data dependence, avoiding any firm commitment to a specific path.