The Bank of England meets on Thursday at 12:00 GMT and expectations from the STIR markets are 100% for a 25 bps hike and 845% for a 50 bps rate hike. In its June meeting, the Bank of England hiked rates by 25 bps to 1.25% in 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.
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 takes a more dovish tilt on Thursday than markets are expecting then watch for potential EURGBP gains.
Major Trade Risks: If the BoE takes a more hawkish approach to manage surging inflation then the EURGBP can buck its seasonal trend.
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