Window for negative rates at BoE has closed9 Feb 2021 10:17
Expect "further GBP upside" say analysts at a leading global commercial lender and investment bank, who have told clients the UK economic rebound from the covid-19 crisis will likely eclipse that of other advanced economies.
In a regular currency briefing note released on Feb. 08, MUFG says the UK's vaccination programme will unlock a significant consumer spending rebound which will likely surprise even the optimistic growth forecasts made by the Bank of England (BoE).
"Due to the progress on vaccine roll-out the BoE now projects GDP growth from Q2 2021 to Q1 2022 of 14.2%, up from 10% in November. We believe there may be upside risks to this projection," says Derek Halpenny, Head of Research of at MUFG.
The Pound has rallied in 2021 on a combination of an EU-UK trade deal agreement being agreed in late December, rising stock markets and a view the country's vaccination programme will deliver a strong economic rebound.
These developments combine to lower the odds of the BoE cutting interest rates again, which is said by foreign exchange analysts to be supportive for Sterling.