Despite dropping its tightening bias at its February gathering, the Bank of England (BoE) maintained a more hawkish stance than the Fed and the ECB, pushing back against interest rate cuts. At the press conference following the latest decision, Governor Bailey said they are not yet at a point where they can lower borrowing costs, adding that policy needs to stay sufficiently restrictive for sufficiently long.
However, this was before last week's barrage of economic data, with the highlight being the preliminary GDP numbers for Q4, which revealed that the economy contracted by more than anticipated, officially entering a technical recession. This weighed on the British pound, which had already been hurt the day before, after the CPI figures suggested that inflation held steady in January, confounding expectations of a small acceleration.
