Economists at TD Securities discuss the Bank of England interest rate decision and its implications for the EUR/GBP pair.
Hawkish Hike (5%): Hike, guidance that cycle not done
“The MPC hikes 25 bps and signals that inflation and wage persistence means that it has likely not reached its terminal rate. Emphasis is placed on the different mandates of the FPC and MPC, leaving the MPC to focus on inflation-fighting. EUR/GBP 0.8700.”
Base Case (45%): Hike, guidance roughly unchanged
“The MPC hikes 25 bps, and leaves its guidance largely unchanged, though the conditions for a further hike are tightened a little on the margin. After Wed's strong inflation, the vote is likely 2/6/1 for 0/25/50. EUR/GBP 0.8900.”
Dovish Hike (15%): MPC signals conditional pause
“The MPC signals a BoC-style ‘conditional pause’, wherein they say that rates may not necessarily rise any further (barring large surprises in the data), and it's time to take stock of the impact of past rate increases. The vote to hike is close (eg 5-4). EUR/GBP 0.8950.”
Hawkish Hold (35%): No hike, but signals intention to continue
“The MPC does not hike rates, but signals that banking sector uncertainty was the principal cause of the pause, and that if volatility settles, it may not have reached terminal yet. The vote to hold is close (eg 5-4). EUR/GBP 0.8950.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD struggles near multi-month low; awaits US CPI before the next leg down
AUD/USD enters a bearish consolidation phase near a multi-month low touched on Tuesday as traders await the release of the US CPI report, due later today, for cues about the Fed's rate-cut path and before placing fresh directional bets.
USD/JPY eases from two-week low; downside seems protected ahead of US CPI
USD/JPY stalls a two-day uptrend near a technically significant 200-day SMA and trades with a mild negative bias just below a nearly two-week low touched Tuesday. A stronger Japan PPI report keeps the door open for a December BoJ rate hike and supports the JPY.
Gold on its way to challenge record highs
The upside momentum in Gold prices gathers extra steam on Tuesday, sending the metal to new two-week tops in levels just shy of the key $2,700 mark per troy ounce.
Could Google's supercomputer crack Bitcoin? Crypto community maintains positive outlook
Bitcoin faced mixed sentiments on Tuesday after crypto community members spoke on the potential of Google's new quantum chip Willow's ability to crack blockchain networks and render the security of public key cryptography useless.
How the US-China trade dispute is redefining global trade
Since Donald Trump took office in 2017, trade flows and market shares have changed substantially. We think that shift is set to continue under looming tariffs and a new protectionist environment.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.