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“The BoE left its policy rate on hold, and was more hawkish than we had anticipated,” noted TD Securities analysts. “However, we maintain our call for a 25bps rate cut in May.”

Key quotes

“We’re sceptical of a sustained drop in business uncertainty as UK-EU trade negotiations get underway, and we see substantial downside risks to the near-term inflation data.”

FX: Sterling is higher after the BoE delivered an unexpectedly hawkish stance. While this should keep GBP firm for now, the near-term outlook is more mixed in our view. We think the BoE is unlikely to cast a long shadow over the pound as market attention remains focused on bigger-picture concerns. This leaves us looking for two-way risks near term in cable as we away further catalysts to guide direction from here.”