BoE Preview: EUR/GBP to move slightly higher and volatility to be high – Danske Bank

Economists at Danske Bank expect the Bank of England (BoE) to hike the Bank Rate (key policy rate) by 25 bps on Thursday, lifting EUR/GBP slightly.

Topside risk to EUR/GBP with a return to 25 bps steps

In our base case of a 25 bps hike, we expect EUR/GBP to move slightly higher and volatility to be high. 

We anticipate Governor Bailey to reiterate the BoE’s data dependent approach at the press conference, essentially kicking the can down the road. 

Overall, we expect the BoE to highlight the continued tight labour market and keep the door open for further tightening. 

On balance, we continue to see relative rates as positive for EUR/GBP, which is one of several reasons behind our fundamental predisposition of buying EUR/GBP dips.