Pound: BoE Expected to Deliver First Hike Since 2023

Final PMI data, a monthly survey of purchasing managers, showed British manufacturers started the fourth quarter with their strongest output growth in more than two years, Reuters reported. Economists polled by Reuters expect the Bank of England to raise rates to 4% from 3.75% on Thursday, its first hike since August 2023.

Companies also expect prices to keep rising. The BoE’s Decision Maker Panel, a monthly survey of company finance chiefs, showed year-ahead inflation expectations rising to 3.3% from 3.1%. Rabobank expects a 7-2 vote among the nine policymakers and a follow-up hike in February. I expect the UK-US rate gap to keep GBP/USD supported this week, since UK rates are set to rise while US yields fall.