The economy in Great Britain continues to weaken. Subsequently, the environment for sterling is difficult, economists at Commerzbank report.

Bank of England to act too cautiously over the coming months

“We see the risk that despite high inflation levels, which reached 9% in April, the BoE will act too cautiously over the coming months due to economic concerns and that it will fall behind the curve.”

“It seems questionable whether it would help Sterling if the BoE sounded surprisingly hawkish on Thursday, though, as a more decisive approach might fuel concerns about a recession, which in turn would put pressure on sterling.”

“Developments in connection with the Northern Ireland protocol are causing additional pressure. A trade conflict with the EU would probably intensify the recession risk further. As a result, sterling is likely to remain under pressure over the coming months.”