The Bank of England (BoE) held a monetary policy meeting on the 4th of November and decided to stay put on its policy rate against market expectations. That said, a potential rate hike could be coming in the next few months and analysts at the National Bank of Canada still see some upside for cable.

Pullback for both the pound and short-term rates

“The BoE decided to stay put. This surprise accordingly moved the short rates lower while the pound depreciated on the news. Moreover, there was also no change made to the QE program. BoE Governor Bailey signalled that a rate hike in the next few months was possible if labour market conditions and data lined up with their objectives.”

“We believe there is some upside for the pound in the coming quarters as the central bank remains more hawkish on a comparative basis, but we remain cautious given that the same factors affecting the eurozone (such as energy, inflation, supply chains) are risks which could work against the recovery for the British economy.”