GBP/USD edges higher this morning despite BOE rate cut expected today

At 12pm GMT the Bank of England is widely expected to lower the Base rate to 4.75%, from the existing level of 5%. Given the £40 billion tax hike from the Chancellor last week that would seem like an appropriate monetary policy response. However, UK yields are even higher this morning due to the fact the government is set to borrow an unprecedented, extra £140 billion over the next 5 years. The UK 10 year yield is right now at 4.55%. The upward pressure on UK yields makes this not such an easy decision for UK Central Bank this morning. The Pound came under pressure from the surging dollar yesterday and that delivered a fall to 1.2834, before later closing in the US at 1.2879. It has lifted further so far today, which seems more about a relapse in the dollar than it would be about any prospect of the BOE not cutting rates later today. That said, whilst the BOE is surely going to cut today, it might be more about what they signal they will do next month that might matter more. The high in the GBP/USD was set just now at 1.2935. It is currently trading at 1.2932