As expected, the Bank of England (BoE) left monetary policy unchanged at the November meeting.
However, the tone was more hawkish than expected as it shifted from an easing bias to a neutral bias, saying that it "can respond in either direction".
Due to this shift and the resilient economic data we no longer expect the bank to ease monetary policy further.
Meanwhile, the High Court ruled that the parliament - not the government - has the power to trigger Article 50. We still think it will be triggered eventually but the ruling makes a 'softer' Brexit more likely.
EUR/GBP declined significantly today - in the short term, we expect GBP trading to be more volatile and further GBP appreciation should not be ruled out.
Over the medium term, we do not see today's events as a major game changer for GBP. We still target EUR/GBP at 0.91 in 3M and 0.92 in 6M.
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