ING economists analyze the outlook for the British Pound (GBP) ahead of the Bank of England (BoE) decision on Thursday.
The Pound Sterling Could Absorb Any New Dollar Recovery Better Than Most Currencies
The February CPI figures released on Wednesday could have a lot to say in what the BoE announces on Thursday. Attention will continue to focus on services inflation, which we expect to slow but remain elevated at 6% (also in line with the Bank's forecasts).
Having abandoned its dovish tone in February, we don't think the central bank will rush to take further steps towards the dovish side of the spectrum, at least unless the CPI surprises lower on Wednesday.
As a last resort, The Pound could absorb any further dollar recovery better than most other currencies, and we see EUR/GBP stabilizing around 0.8500 or trading closer to the major support at 0.8500 in the near term.
Source: Fx Street
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