The Bank of England (BoE) hiked the Bank Rate by 50 bps to 3.50%. Economists at Danske Bank believe that the EUR/GBP pair is set to move marginally lower.

A dovish 50 bps as BoE nears the end of hiking cycle

“In line with our expectation, the BoE today hiked policy rates by 50 bps, bringing the Bank Rate to 3.50%.”

“We expect the increasingly weak growth outlook to support a near-term ending to the hiking cycle.” 

“We maintain our call for a 25 bps hike in February with risks to our call skewed towards additional hikes in 2023 if inflation pressures show increasing persistence.”

“We see a case for the EUR/GBP cross to move modestly lower as a global growth slowdown and the relative appeal of UK assets to investors are a positive for GBP relative to EUR.”