The drastic repricing of the Bank of England’s tightening cycle has taken its toll on the British pound in recent weeks. ING economists analyze GBP outlook ahead of interest rate decision.
EUR/GBP would test July high at 0.87 if Bank of England surprises with pause
The market only values the possibility of a 25 basis point rate hike today at 47%. It is possible that the Bank of England will not be swayed by some of the volatility factors that lowered the CPI in August and that, instead, continued high wage growth will be the determining factor in whether it will end up after all. produce an increase of 25 basis points. This is the opinion of ING.
A rate hike would provide GBP/USD with much-needed support. Otherwise, the path towards 1.2100 would be open. Similarly, EUR/GBP would test the July high at 0.87 if the BoE were to surprise with a pause.
Source: Fx Street
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