According to Arne Lohmann Rasmussen, chief analyst at Danske Bank, today’s MPC meeting in the BoE is not likely to spur longer-lasting price action for sterling as it has been weighed upon by week data recently, but Brexit is set to return as its key driver and thus.
“Market is pricing in the next BoE rate hike to arrive in January 2021, and given the already relatively dovish pricing of the BoE, we do not expect GBP to suffer from potential down revisions to the bank’s GDP and CPI estimates.”
“We expect EUR/GBP to stay within the 0.86-0.89 range near term with the development in Brexit negotiations directional for the cross. Note that Theresa May is expected to visit Brussels today. As such, appetite for GBP is likely to deteriorate as time passes without any signs of a new agreement between the EU and UK.”