Deutsche Bank Revises BoE Rate Outlook Amid UK Fiscal Tightening Pressures Pound Below 1.3400

Deutsche Bank economists Sanjay Raja and Maui Brennan have updated their Bank of England interest rate forecast, now anticipating two 25 basis point hikes in November and February, according to FX Street (Deutsche Bank Research). This marks a shift from their previous expectation of no rate increases.

Meanwhile, the British pound remains pressured below the 1.3400 USD level as the UK government adopts tighter fiscal policies. Elias Haddad of Brown Brothers Harriman told FX Street that Chancellor John Healey’s measures to tighten taxes and reduce spending are contributing to the sterling’s weakness against the dollar.

For Japanese investors, these developments underline the increasing divergence in monetary and fiscal policy approaches in the UK, which could impact GBP-related FX and equity positions amid global market volatility.