Sterling Tumbles on BoEâs Dovish Rate Cut
| Action Insight Mid-Day Report 2-6-25 |
Sterling Tumbles on BoE’s Dovish Rate Cut |
The British Pound weakened significantly after BoE delivered a 25bps rate cut. The policy decision was more dovish than anticipated, primarily due to the unexpected shift in the MPC voting split. Catherine Mann, previously one of the most hawkish members of the committee, reversed course and joined Swati Dhingra in voting for a more aggressive 50bps cut. Adding to the bearish sentiment on Sterling, BoE’s updated economic projections painted a complicated macroeconomic outlook. The central bank sharply downgraded its 2025 GDP growth forecast. At the same time, inflation forecasts were revised higher. Facing the increased uncertainty, BoE emphasized its commitment to a "gradual and careful" approach to policy easing. Overall with today's announcement, risk is clearly tilted toward a more dovish policy stance. The base case remains as one 25bps cut per quarter throughout 2025,. But today’s decision raises the probability of a faster easing cycle, in particular if growth conditions worsen further.... |
GBP/USD Mid-Day Outlook Daily Pivots: (S1) 1.2462; (P) 1.2506; (R1) 1.2548; More... GBP/USD dips notably today but stays above 1.2248 support and intraday bias remains neutral. While corrective rebound from 1.2099 could still extend, upside should be limited by 38.2% retracement of 1.3433 to 1.2099 at 1.2609. On the downside, break of 1.2248 support will bring retest of 1.2099 first. Firm break there will resume whole decline from 1.3433. However, decisive break of 1.2609 will raise the chance of near term reversal, and target 61.8% retracement at 1.2923. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 00:30 | AUD | NAB Business Confidence Q4 | -4 | -6 | -7 | | 00:30 | AUD | Trade Balance (AUD) Dec | 5.09B | 6.73B | 7.08B | 6.79B | | 06:45 | CHF | Unemployment Rate M/M Jan | 2.70% | 2.70% | 2.60% | 2.70% | | 07:00 | EUR | Germany Factory Orders M/M Dec | 6.90% | 1.70% | -5.40% | -5.20% | | 09:30 | GBP | Construction PMI Jan | 48.1 | 53.7 | 53.3 | | 10:00 | EUR | Eurozone Retail Sales M/M Dec | -0.20% | -0.10% | 0.10% | 0.00% | | 12:00 | GBP | BoE Interest Rate Decision | 4.50% | 4.50% | 4.75% | | 12:00 | GBP | MPC Official Bank Rate Votes | 0--9--0 | 0--8--1 | 0--3--6 | | 12:30 | USD | Challenger Job Cuts Y/Y Jan | -39.50% | 11.40% | | 13:30 | USD | Initial Jobless Claims (Jan 31) | 219K | 214K | 207K | 208K | | 13:30 | USD | Nonfarm Productivity Q4 P | 1.20% | 1.80% | 2.20% | | 13:30 | USD | Unit Labor Costs Q4 P | 3.00% | 3.30% | 0.80% | | 15:00 | CAD | Ivey PMI Jan | 53 | 54.7 | | 15:30 | USD | Natural Gas Storage | -167B | -321B |
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