The Bank of England (BoE) will announce its interest rate decision and publish the Monetary Policy Summary later in the session. As markets expectations as set to remain unchanged, GBP/USD could recover to the 1.2250 region, economists at ING report.

25 bps from the BoE and no day of reckoning

“We look for a 25 bps hike from the BoE, taking the Bank rate to 1.25%. The market prices the Bank rate at 2.80% by the end of this year. Most of us think that at some point there will be a 'day of reckoning' for sterling when the BoE aggressively wants to correct market expectations. But we do not think that will be today.”

“EUR/GBP could correct back to the low 0.85s if the BoE leaves market expectations unchanged, while GBP/USD could be a pair to recover from a temporary lift in equity markets – potentially drifting up to the 1.2250 area.”

See – BoE Preview: Forecasts from nine major banks, hikes to continue until inflation improves