The Bank of England meet on Thursday at 1200GMT and expectations are 1000% for a 25 bps hie and over 80% from STIR markets for a 50 bps rate hike. In their June meeting the Bank of England hiked rates by 25 bps to 1.25% on a move that was widely anticipated. For the UK headline inflation is expected to move into double digits and growth is expected to turn negative in 2023. This stagflationary environment has been weighing on the GBP for some time. If the BoE take a more dovish stance on Thursday then watch for EURGBP gains.
Over the last 15 years, between Aug 02 and Aug 28, the EURGBP has had a 14.58% return. The pair has gained 10 times with an average return of 0.97%
If the BoE take a more dovish tilt on Thursday, say by hiking by only 25bps, then watch for potential EURGBP gains.
Major Trade Risks:
If the BoE take a more hawkish approach to manage surging inflation then the EURGBP can buck its seasonal trend.
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