Post #15780

Surprise Dovish Vote Kills the Pound GBP/USD is under pressure as rate differentials move against the pound. Momentum has turned lower, with rallies likely to face selling as expectations for UK easing build. The Bank of England held rates at 3.75%, but the 5–4 vote split leaned far more dovish than markets expected. Policymakers signaled cuts could come sooner if disinflation continues, and the BoE slashed its inflation forecast to 1.7% — below target. Markets rapidly repriced the path: nearly 50 bps of cuts are now priced by year-end (up from ~35 bps pre-decision). UK 2-year gilt yields posted their biggest one-day drop in months, reflecting the shift in short-rate expectations, while 10-year yields also eased. Softer inflation projections + a dovish tilt from the MPC are pulling yields and sterling lower, as traders bring forward the UK easing cycle. - Alan