Markets expect 50 bps by the Bank of England. Economists at ING analyze how could the BoE’s policy announcement affect the EUR/GBP and GBP/USD pairs. 

No fireworks by the BoE

“The swap market is fully pricing in a 50 bps hike, and we doubt the reaction in Sterling will be meaningful.” 

“EUR/GBP may be more impacted by potential surprises from the ECB, while some stabilisation or modest recovery by the Dollar may cap GBP/USD and prevent 1.2500 from being tested before year-end.”

“Heading into the new year, we still see a preponderance of downside risks for GBP/USD as hawkish central banks (above all, the Fed) hiking into a recession point to the underperformance of highly risk-sensitive currencies like the Pound.”

See – BoE Preview: Forecasts from 13 major banks, a fairly straightforward 50 bps hike