GBP/USD, EUR/GBP: GBP by Dimming BOE Cut Prospects

 The view is that rates could bottom with a further 25bps cut in 2026 at 3.50% given the BOE guidance that further rate cuts will now be a close call.  However, the economist’s consensus is towards two 25bps cuts, on the view that UK economic weakness will prompt the MPC hawks to give ground and deliver more than discounted in the money market.  A minority of economists including Continuum Economics feel that three cuts could be delivered, given the scale of the slowdown in the labor market and wages.  We look for 75bps of cuts and EUR/GBP ending 2026 at 0.90. Final GDP data had little to provide for GBP direction.