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Investing.com -- HSBC predicts the Bank of England will maintain its quantitative tightening pace at £100 billion per year, contrary to market expectations.
The latest Market Participants Survey showed median expectations of QT slowing to £72 billion over the 12 months from October.
According to HSBC, the BoE’s decision on quantitative tightening this week could impact the pound sterling, particularly as foreign exchange markets closely monitor longer-bond yield movements in countries with substantial fiscal burdens like the UK.
HSBC notes that if the central bank maintains the £100 billion QT pace, it could put upward pressure on Gilt yields.
This might create challenges for the pound sterling, especially considering the risk of unfavorable public sector borrowing figures expected on Friday.