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Nov 04 - 12:55 AM

GBP: A One-Off 75bps Hike From BoE; EUR/GBP To Remain Elevated N-Term - Danske

By eFXdata  —  Nov 03 - 04:30 PM

Danske Research discusses its reaction to today's BoE policy decision. 

"In line with our expectation, the BoE today hiked policy rates by 75bp, bringing the Bank Rate to 3.00%. We expect fiscal tightening and recession to weigh on the economy, which in our view, supports a slower hiking pace going forward. We maintain our call for a 50bp hike in December and 25bp in February with risks to our call skewed towards additional hikes in 2023," Danske notes. 

"EUR/GBP initially moved higher upon announcement to 0.8700 from 0.8650 and continued its move higher to 0.8730 during the press conference, as expected. We see a case for EUR/GBP to remain elevated in the near-term, but in the longer-term expect the cross to move lower as a global growth slowdown and the relative appeal of UK assets to investors are a positive for GBP relative to EUR," Danske adds. 

Source:
Danske Research/Market Commentary

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