The BoE is expected to deliver a 25bps rate cut and a dovish tone, with EUR/GBP likely to rise as inflation undershoots and growth concerns persist, Danske Bank's FX analysts report.
Inflation surprise supports dovish policy shift
"The big event for UK markets today is the BoE meeting this afternoon. We expect the BoE to cut the Bank Rate to 4.25% in line with consensus and market pricing. Inflation has surprised to the downside over the past months and combined with elevated uncertainty and downside risks to growth from the trade war, we expect the MPC to deliver a slightly dovish twist."
"We expect EUR/GBP to end the meeting higher on dovish commentary. We stay negative on GBP. Note the decision and statement is published at 13:02 CEST considering the national two minutes of silence to commemorate the 80th anniversary of VE day."
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