Economists at Danske Bank discuss EUR/GBP outlook ahead of the Bank of England (BoE) meeting.
GBP headwinds to set in
In our base case of a 25 bps hike, we expect EUR/GBP to end the day higher on dovish commentary.
We anticipate the statement to strike a dovish tone, noting that monetary policy is restrictive while reiterating the BoE’s data dependent approach. We expect the BoE to highlight that elevated wage growth and service inflation remain the upside risks.
We continue to forecast EUR/GBP to move modestly higher in the coming year to 0.88 on the UK economy performing relatively worse than the Euro area.
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