EUR/GBP: Relative rates seen as a positive from here – Danske Bank

Market news

3 August 2023

EUR/GBP: Relative rates seen as a positive from here – Danske Bank

The Bank of England (BoE) hiked the policy rate by 25 bps, bringing the Bank Rate to 5.25%. Economists at Danske Bank stay negative on GBP with BoE nearing peak.

Negative GBP stance

The BoE hiked the Bank Rate (key policy rate) by 25 bps to 5.25% with 6 members voting for a 25 bps hike, two members for 50 bps and one member voting for keeping the Bank Rate unchanged.

We stick to our call of a final 25 bps hike in September marking a peak in the Bank Rate of 5.50%. Wage growth and service inflation remain the key releases to follow.

We continue to see relative rates as a positive for EUR/GBP from here, which is one of several reasons behind our fundamental predisposition to buying EUR/GBP dips.

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