As the market holds its breath for today's BoE rate decision and economic projections, Sterling is trading on a softer note, barring against Euro. Overnight attempts to resume the recent rally against Dollar were short-lived, with the Pound returning swiftly to its familiar range. The potential for hawkish and dovish surprises, or simultaneously both, at today's meeting promises a volatile session for the British currency.
Sterling's response to BoE rate hike has been somewhat ambivalent. Despite BoE's openness to further tightening and a rosier economic outlook, forecast for inflation indicates a marked downturn, with a "material" undershooting expected in the forecast horizon. The voting pattern held no surprises, leaving the Pound now turning its attention to tomorrow's GDP data for potential directional cues.