Economists at ING discuss BoE outlook and its implications for Sterling.

EUR/GBP to climb from these levels

“Some comments from Bank of England Governor Andrew Bailey yesterday did not add much to the recent BoE rhetoric. Expectations are for a rapid decline in inflation, but policymakers remain ready to react to signs of persistence in price pressures and will be closely monitoring wages, services and labour tightness.”

“Given the Sonia curve currently prices in around 19 bps of tightening for June and 40 bps in total before the peak, we think there is plenty of dovish repricing to be passed through to Sterling, and we expect EUR/GBP to climb from these levels: we target 0.88-0.89 this summer.”