Ekonomické zprávy
04.11.2021

GBP: Enthusiasm curbed - ING

Economists at ING discuss the prospects of GBP following the Bank of England's (BoE) latest policy update.

"Failure of the BoE to deliver on the expected 15bp hike today has triggered quite a sharp adjustment in money market rates and the pound. The biggest adjustment seems to have come in the late 2022 pricing for BoE rates, where the December Short-Sterling interest rate contract has rallied 18 ticks. EUR/GBP has risen around 0.9% - close to resistance levels at 0.8530."

"Given that it looks like the BoE will probably go ahead and hike in December and that its ‘rate protest’ against market pricing of the BoE policy cycle was relatively modest, we doubt GBP has to fall too much further. For example, EUR/GBP sellers may return in the 0.8530/60 area."

"And assuming that the BoE does hike in December and that UK inflation will keep the BoE poised to act through to next April when UK inflation peaks, we expect EUR/GBP to be pressing and potentially breaking below the 0.8400 level around the turn of the year."

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