Published: 2024-12-23T14:30:02.000Z
EUR/GBP Flows: BOE Rate Cuts
Director of Research , Macroeconomics and Strategy
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GBP heads into Christmas well underpinned versus the EUR, amid money market expectations that the BOE will only cut by two 25bps steps in 2025 (first one full priced for May!) versus four from the ECB.
Nevertheless, we would feel that the FX market is at risk from the BOE moving quicker and more than discounted, with the 6-3 split and statement at the December meeting (here) showing the BOE is close to cutting. Additionally, slowing hiring suggests that the employers NI hike will likely not be inflationary and could stall the economic recovery in H1 2025. Technical analysis-based traders still want to test 0.8215, but if this fails in January then February could see a setback for the GBP bulls v EUR.