GBP is correcting. Overview for 11.05.2023

The British pound sterling declined against the US dollar on Thursday. The current GBPUSD quote is 1.2577.

The pair tested local highs yesterday but failed to secure them.

Today is a big day for the GBP: the Bank of England is holding a meeting to decide on the interest rate and give signals on further actions. BoE governor Andrew Bailey will be renewing not only the outlook but also the composition of the monetary committee.

The interest rate will most likely increase by 25 base points following today’s meeting. The CB might leave the door open for the next hike. However, how the votes of monetary policymakers will be distributed will tell a lot about the real outlook. Most likely, seven members of the monetary committee will vote in favour of an interest rate hike, and two will be against it. This has been the case in the past. The risk is that they may be frightened by the latest statistics, and if so, there will be more votes in favour of a significant increase in the interest rate.

Another question is whether the Bank of England will be maintaining its rhetoric supporting an inclination to further tightening.

Inflation in the UK remains high, and this is the main argument for a rate hike. However, unless there are really unpleasant economic signals in the next few weeks, there could be a pause in the series of interest rate hikes after the next BoE meeting in June.

Overall, the pound is fully focused today on what the BoE has to say.