Strong GBP Still A Concern For BOE - Buys Time Before The Crucial Meetin

Published 11/06/2015, 01:54 AM
Updated 05/14/2017, 06:45 AM

In reality, there was little in today's announcement from the Bank of England (BoE). For now, we stick to our view that it will hike in February but the risk is skewed towards a later hike. Consensus has also moved to Q2 over the past few months. Market pricing is still too dovish though, in our view.

The markets had built up expectations prior to the meeting that the BoE would take a hawkish stance in line with recent Fed comments, which partly explain the market reaction. We think the BoE is awaiting the next ECB meeting, which is held seven days before the next BoE meeting. The December meeting is crucial for our more hawkish view on the BoE.

We expect EUR/GBP to trade gradually lower in three to six months.

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