The pound was the second-worst performing G10 currency in March with only the yen performing worse. Economists at MUFG Bank believe that weaker growth compels the Bank of England (BoE) to act cautiously.

Weaker growth compels the BoE to move to the sidelines

“We see potential for the BoE to pause its tightening cycle after hiking in May and August as weaker growth throughout the remainder of the year will provide justification for that and act to weigh on GBP performance.”

“We have revised lower our GBP forecasts based on a more cautious BoE given the weaker growth outlook.”