HSBC, one of UK’s biggest banks, predicts that the BoE is going to increase interest rates two times in the next twelve months, though it has expected rates to remain at the lowest level till 2019 a while ago. On Monday, the bank reported it anticipated rates to be moved up 25 basis points in November, the second hike in May next year, pushing UK interest rate to 0.75%.
BoE’s MPC minutes this month had a hawkish tone, though later statements of ex-doves M. Carney and J. Vlieghe have likely made it certain, HSBC’s E. Martins wrote to their clients. These fresh predictions on BoE actions and other contributing factors force HSBC to review the outlook for this year’s sterling by a solid 15 cents, making it $1.35.
The bank now doesn’t expect pound to be equal to euro as well, but this seemed probable to happen this year some time back.
The current forecast is 89 pence for a euro by this year’s end, and 95 pence for a euro by the end of 2018.
The BoE’s sudden appetite for ditching accommodative monetary policy following the rest of G10 countries has propelled sterling forward, though it has managed to avoid the repercussions of Brexit vote all through this year, HSBC’s D. Bloom pointed out.