It took the Bank of England (BoE) a while, but in August it finally started its easing cycle, ING’s FX analysts Francesco Pesole and Chris Turner note.

BoE rate cuts can prompt GBP longs downsizing

“No forward guidance was given – probably owing to the fact that it was only a 5-4 vote in favour of a cut. And the fact that the Chief Economist Huw Pill voted against the dovish Governor Andrew Bailey was notable.”

“Yet subsequent speeches suggest that if services inflation can continue to trend lower, more cuts will be forthcoming. We look for 25bp cuts in November and December. This should keep GBP/USD relatively contained and largely sub-1.30.”

“Speculators had also been running quite long GBP positions. We think BoE rate cuts can prompt some downsizing here.”