Sterling’s reaction to BoE unlikely to be meaningful – ING
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Markets expect 50 bps by the Bank of England. Economists at ING analyze how could the BoE’s policy announcement affect the EUR/GBP and GBP/USD pairs.
“The swap market is fully pricing in a 50 bps hike, and we doubt the reaction in Sterling will be meaningful.”
“EUR/GBP may be more impacted by potential surprises from the ECB, while some stabilisation or modest recovery by the Dollar may cap GBP/USD and prevent 1.2500 from being tested before year-end.”
“Heading into the new year, we still see a preponderance of downside risks for GBP/USD as hawkish central banks (above all, the Fed) hiking into a recession point to the underperformance of highly risk-sensitive currencies like the Pound.”
See – BoE Preview: Forecasts from 13 major banks, a fairly straightforward 50 bps hike
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