GBP: Battling the Overwhelming BoE Rate Hike Expectations! What's next for EUR/GBP?
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GBP: Hard to fight the aggressive BoE pricing
Money markets now price 100bp of Bank of England tightening by November.
This would put the Bank Rate at 5.50%. Our team's view is that such an amount of tightening is highly unlikely and that the usually reticent Bank of England may try and verbally push back against it.
However, UK data is doing the most of the talking and it will probably be the jobs/wages data (13 June) or the May CPI data (21 June) which will be the key determinant on whether the market reins in aggressive tightening expectations.
Until then, EUR/GBP can probably press support at 0.8650, below which 0.8600/8610 is the next target. GBP/USD can better resist the stronger dollar. Support around the 1.2275/2300 area may hold temporarily.
