Danske Research discusses its reaction to today's BoE policy meeting.
"Against our expectation of a rate cut, the Bank of England announced the Bank Rate remains unchanged at 0.75% (vote count 7-2 unchanged). As investors thought today's decision was a coin toss, we saw a move lower in EUR/GBP from 0.848 to 0.841, so still above 0.84 as expected. Overall, we think today's decision was a dovish hold.
"FX: more GBP weakness is on the cards. As expected, EUR/GBP moved lower on the Bank of England's decision to remain on hold. EUR/GBP moved towards but still above 0.84 (from 0.848 ahead of the announcement). While we were wrong in calling for a rate cut, we still think more GBP weakness is on the cards this year. Near-term, we think GBP will remain sensitive to post-election data releases. If we are right that the economy will disappoint, we could see a repricing of the Bank of England, sending EUR/GBP higher. We are targeting the cross to move towards 0.87 in 3M," Danske adds.