Market Outlook: A BoE Rate Cut Could Weaken the Pound

Forex - MUFG Bank analysts stated that the British Pound may perform poorly in the later months of the year if the Bank of England becomes more proactive in lowering interest rates than previously assumed.

During its December meeting, the BOE voted 6-3 to maintain interest rates, with three policymakers preferring to implement a rate cut. Analysts believe this indicates that the overall structure of the BOE's Monetary Policy Committee is becoming less cautious regarding interest rate reductions.

Analysts mentioned, "We believe that the interest rate market is underpricing the BOE's rate cuts, which suggests that lower yields will contribute to the underperformance of the Pound, leading to an increase in EUR/GBP."