The Bank of England was one of the first of its developed market peers to raise interest rates in December. Money markets now expect the central bank to raise rates by 100 bps this year.
- MPC expected to raise rates for second straight month
- Bailey set to acknowledge squeeze on household finances
- BoE likely to signal further hikes ahead
Currency markets didn’t pay attention to the latest developments in the political crisis in Britain over lockdown parties at Downing Street. Six Conservative MPs now say they want a vote of confidence in Prime Minister Boris Johnson’s leadership on Wednesday.
While those punchy rate expectations are already priced into current levels of the pound, analysts believe the British currency could potentially extend gains if policymakers strike a more hawkish tone to curb inflation.
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