The GBP has been supported of late, mainly on the back of rising UK growth expectations. Elsewhere, intact Greece-related uncertainty appears to have increased safe haven-related demand for the currency.

Looking ahead, investor focus turns to today’s BoE inflation report.

We expect the central bank to communicate a more constructive growth outlook while keeping the medium-term inflation outlook broadly stable. This suggests little scope of falling monetary policy expectations.

e-Institutional Views

On the contrary, assuming further improving labour market conditions to the benefit of wage price developments, central bank members may start to communicate a more hawkish policy stance sooner than currently assumed.

As a result of the above outlined conditions we remain short EUR/GBP.

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