💡 GBPUSD: BOE reduced interest rates at the May policy meeting

MUFG predicts that the Bank of England (BoE) may signal its readiness to lower interest rates soon, potentially starting as soon as the upcoming meeting. Recent statements from MPC members and upcoming inflation forecasts support a shift towards a more dovish policy stance. Key points:

1. Policy rate expectations: BoE will likely maintain the current policy rate at 5.25% in its next meeting. However, recent dovish changes in the rhetoric of MPC members, especially from Deputy Governor Dave Ramsden, indicate a growing trend towards interest rate cuts.
   
   
2. Inflation and economic outlook: The BoE's quarterly inflation report is expected to reflect an updated economic outlook, suggesting the risk of inflation overshooting target is receding. This change could confirm a softer approach to monetary policy.
   
   
3. MPC voting pattern: Many MPC members may be influenced by Lieutenant Governor Ramsden's views and moderate in the upcoming vote. This change in voting dynamics could pave the way for interest rate cuts in the next meetings.
   

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The movements on GBPUSD are quite similar to EURUSD, however the bearish signal is much clearer. We have failed with our recent short positions as the price approached the upper boundary of the down channel, however the newly formed bearish pin bar pattern is showing that an upward correction is forming.

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