GBP/USD to drift up to the 1.2250 area if BoE leaves market expectations unchanged – ING

The Bank of England (BoE) will announce its interest rate decision and publish the Monetary Policy Summary later in the session. As markets expectations as set to remain unchanged, GBP/USD could recover to the 1.2250 region, economists at ING report.

25 bps from the BoE and no day of reckoning

“We look for a 25 bps hike from the BoE, taking the Bank rate to 1.25%. The market prices the Bank rate at 2.80% by the end of this year. Most of us think that at some point there will be a 'day of reckoning' for sterling when the BoE aggressively wants to correct market expectations. But we do not think that will be today.”

“EUR/GBP could correct back to the low 0.85s if the BoE leaves market expectations unchanged, while GBP/USD could be a pair to recover from a temporary lift in equity markets – potentially drifting up to the 1.2250 area.”

See – BoE Preview: Forecasts from nine major banks, hikes to continue until inflation improves