ING strategist Francesco Pesole highlights that Bank of England (BoE) Governor Andrew Bailey is scheduled to speak in New York, while the two most hawkish Monetary Policy Committee (MPC) members, Catherine Mann and Megan Greene, are also set to deliver remarks today. Recent comments from Megan Greene have been described as more balanced, as she has emphasized the dual impact of higher inflation and lower demand resulting from the oil shock [1].
According to ING, Governor Bailey is expected to maintain a balanced tone in his speech, implicitly signaling that a pause in rate hikes is the preferred course of action for the BoE at this time. ING maintains its view that the BoE will not raise rates further this year, a stance they believe is consistent with a move to 0.88 in the EUR/GBP currency pair [1].
Market pricing currently reflects expectations of a 45 basis point increase by year-end, but ING's outlook diverges, suggesting that the BoE's cautious approach will underpin the EUR/GBP cross. The anticipation of no further rate hikes is seen as supportive for the currency pair, according to ING's analysis [1].
CONCLUSION
ING expects the Bank of England to maintain a pause in rate hikes for the remainder of the year, supporting a move to 0.88 in EUR/GBP. The BoE's cautious stance, as reflected in upcoming speeches by key officials, is seen as a stabilizing factor for the currency pair.