Pound Sterling Waits on BOE Forecast Amid Hawkish Tone Expectations

The Pound Sterling has been stuck in neutral for two days, trading just under 1.3300 as it waits on a forecast from the Bank of England. The BOE's rate decision and quarterly report are due out Thursday at 11:00 GMT, with consensus pointing to an unchanged 3.75% interest rate.

However, the market has already priced in a 30% chance of a hike, down from 36% over the weekend. This has pushed any potential tightening further out, with cumulative odds of at least one hike above 76% by September and above 91% by December.

The energy crisis has also had an impact on the Pound's forecast, as the premium that was driving inflation has drained out of energy prices. This means that the BOE's projections are now conditioned on a softer energy profile, which could mean a hawkish tone in Thursday's report.

Despite this, the vote is expected to be 7-2 in favor of keeping interest rates at 3.75%, with two members preferring 4.00% and none preferring a cut. The real interest lies in the tone of the briefing and any dissenting voices on the committee.