BOE to hike rates by 25 bps to curb UK inflation

In the Asian session on Wednesday (May 10), GBP/USD edged higher, tentatively at 1.2625, an increase of 0.02%. Analysts at Barclays said the Bank of England is expected to raise interest rates by 25 basis points in May and June to curb inflation in the UK.

Barclays expects the Bank of England to keep its key interest rate unchanged at 4.75% until the second half of 2024 due to the stickiness of inflation and wage growth. However, Barclays said the risk is that the Bank of England begins shifting its monetary policy stance to a more accommodative level earlier, and the risk is greater if the Fed starts a rate-cutting cycle in September 2023, as the market is pricing in.