BoE Mann says too many rate cuts priced in

GBP ticked lower after Catherine Mann, member of the Bank of England, hinted in a speech that markets may be pricing in too many rate cuts. However, these moves were later erased and GBPUSD is now trading higher than it was before the speech. It should be noted that Mann is one of the biggest hawks among Bank of England policymakers and has just recently changed her vote from 'hike' to 'hold'. Below are key comments from the speech.

BoE Mann comments

• It was time to move from a rate hike
• I changed my vote on rates due to consumers disciplining firms pricing, changing dynamics in labour market and the financial market curve
• Discretionary services inflation has started to soften in the last couple of months
• Firms are increasingly cutting hours in the labour market
• Labour market is tightening and firms are hiring less
• Disconnect in the labour market will soften wages
• In February, I thought the markets were easing too much
• Markets are perhaps a bit too complacent about how long the Bank of England will hold rates
• Markets are pricing in too many cuts to rates
• In some ways, Bank of England does not have to cut because the market already is
• Market curve move shows uncertainty about the economy
• Market curve in the UK is importantly affected by the decisions of the ECB and Fed
• Wage dynamics stronger in the UK than in the United States or euro area
• It's hard to argue BoE would be ahead of ECB and Fed

GBPUSD dropped and tested 1.2641 area after BoE Mann said that markets are pricing in too many rate cuts. However, the pair recovered later on and climbed to a fresh daily high above 1.2658. Source: xStation5