May, May go away
On the 10th of May at 1200BST the Bank of England will announce rates are to be kept on hold. It is widely reported that the rate hike for May is now definitely off the table. However, some now see a rate cut as the next portent move out of the Bank of England
One analyst, Neil Jones, a foreign exchange dealer with Mizuho Bank Ltd, in London, believes the next move at Threadneedle Street may be to in effect cut rates by postponing a rate hike all year and then with a post Brexit cut after March 2019. This would be in a hard Brexit scenario. See here for his outlook.
This outlook is interesting, but in itself is subject to Brexit negotiations. Neil's forecast depends on a hard Brexit. However, a customs arrangement could happen before the March 2019 deadline. I also suspect that Q1 was a blip for the UK. The inclement weather was exceptional and Q2 could well show a rebound when we get more data in. What the outlook from Neil reminds us is that Brexit is a constant source of uncertainty for the GBP. The end of Brexit will present a much clearer path for GBP when March 2019 has been and gone....
