Markets are currently pricing in a 25% probability of a Bank of England (BoE) rate cut today, according to ING’s FX analyst Francesco Pesole.
Pesole notes that the upside potential for the British pound (GBP) remains limited in the coming weeks. He explains, “Our call is for a hold, as a single positive inflation print shouldn’t be enough to bring an MPC majority behind a cut. However, the vote split could be 6-3 or perhaps a more dovish 5-4, which would signal that the bar isn’t high for a cut in December.”
“There are some upside risks for GBP today,” he adds, “as markets may not receive clear signals regarding a December move—only 16 basis points are currently priced in. Additionally, EUR/GBP is still trading around 1% above its short-term fair value.”
Despite these factors, the upside for GBP is expected to remain capped in the near term. Prospects of tax hikes and upcoming CPI data may ultimately bolster dovish bets. Francesco Pesole’s year-end target for the EUR/GBP exchange rate remains at 0.880.
https://bitcoinethereumnews.com/finance/bank-of-england-to-hold-december-cut-in-play-ing/