GBP may hold on to gains after BoE hike – ING

Economists at ING do not expect the Bank of England (BoE) meeting to be a game-changer for Sterling.

Sterling may hold on to recent gains for a bit longer

“We acknowledge that part of GBP’s recent strength has been due to the market’s aggressive expectations about BoE tightening, and therefore recognise there are downside risks as those (excessive, in our view) hawkish expectations are scaled back. However, we suspect the BoE will neither offer enough dovish hints today to trigger that dovish repricing, nor enough of a hawkish narrative to match the amount of tightening already priced into the GBP curve.”

“If anything, the balance of risks is skewed to the downside, but our call is for this meeting to have a relatively contained directional impact on the pound today.”

“Cable may stabilise around 1.26 and EUR/GBP around 0.8700 for now.”