BoE: Launching a hiking cycle – Danske Bank

Based on the hawkish signal from the BoE, analysts at Danske Bank now expect the bank to hike the Bank Rate to 0.75% as early as May (previously February 2019).

Key Quotes

“As this seems like the beginning of a hiking cycle, the BoE is likely to hike again in November.”

“In the short term, we see little room for higher rates but believe the curve will steepen substantially further out.”

“This has strengthened the case for a lower EUR/GBP. We now expect EUR/GBP at 0.87 in 3M (previously 0.88), 0.86 in 6M (0.87) and 0.84 in 12M (0.86). Brexit remains a key driver for GBP, but the currency is likely to be more sensitive to UK data.”