Societe Generale Sees Pound Outperforming Peers on Hawkish BoE

The British Pound (GBP) is expected to outperform its G10 peers outside of the US Dollar (USD), according to Societe Generale. The bank attributes this potential for sterling to accelerate UK growth and inflation, which strengthen the case for a more hawkish Bank of England (BoE).

Accelerating GDP growth, CPI inflation, and PPI inflation are seen as key drivers behind the potential for the BoE to become more hawkish. This could lead to an increase in bank rate, with some members of the Monetary Policy Committee (MPC) already advocating for a hike.

The bank's economists expect Bank Rate to remain unchanged at 3.75%, but note that there is a possibility that policy may need to be more restrictive to bring inflation down to target. This could lead to a revision in growth and inflation forecasts, which could have implications for the pound.