GBP/USD, EUR/GBP flows: BoE avoids hawkish surprise, cross drifting up off range floor
BoE delivers the expected 7-2 vote for unchanged
Small lift for EUR/GBP on confirmation and lack of hawkish surprise
Overall, recent action remains largely technical driven with the recent measured range bounce
BoE with the unchanged outcome and the 7-2 vote is in line with expectations. Inflation is now seen at a little over 3.25% in Q4 compared to 3.6%-3.7% under scenario A. Recent deal also noted although outlook uncertain and energy gains of the last 4 months in the pipeline still. Weaker labour market and financial conditions tightening also acknowledged more.
Overall then, while the Bank still positions this as an ‘active hold’ with a tightening bias if second round effects emerged, it does support the notion that the majority can continue to support on-hold policy this year assuming a more benign geopolitical scenario continues to play out.
10 tick lift for EUR/GBP on confirmation and the lack of any hawkish shocks and as the cross continues what has been yet another range bounce in recent sessions from the 0.8620 floor.
Circa 0.8680 is next resistance within the wider band that swings to 0.8720/40. The downtrend from Nov runs to about 0.87~.
Overall, nothing standout in sterling at the moment - still largely technical driven trade