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Markets now expect a June interest rate cut for UK

MPC member and deputy Governor, Sir Dave Ramsden, votes for a UK interest rate cut..

So it looks like the BoE and the ECB will cut interest rates at the same time after all. There is over a 50% chance that the UK follows the EU and cuts rates next month. This will either increase or decrease substantially once we see the next two inflation reports, which are both due before the next BoE meeting.

Judging by the data and the overall dovish tone from the meeting, it won't take much for members to jump ship from being a 'holder' to a 'cutter'. The most interesting and significant thing out of the day was seeing Dave Ramsden vote for a cut. 

This is because in 2022 & 2023 Mr Ramsden was the 'leader of the pack' on when to hike interest rates and again when to hike by a larger margin. So history tells us that when he moves, others follow. Sterling lost 0.3% overall yesterday after the vote and following press conference.

This morning, the UK released its Q1 GDP figure which comfortably beat estimates (0.6% v 0.4%). At the end of last year, it was confirmed the UK was in a shallow but technical recession and today confirms that recession is officially over. 

So some good economic figures for the UK today followed some good news for consumers yesterday (inflation is under control and interest rates can come down), but where does that leave the Pound? The simple answer is £-€ may get slightly weaker in the build-up to June's BoE meeting and beyond with £-$ almost certainly looking like it will fall both before and after the interest rate call next month.