Bank of England likely to cut in August, EUR/GBP recovery could wait – ING

The Bank of England’s statement and minutes on Thursday indicated that officials are close to a rate cut Ratesnotes Francesco Pisol, Forex strategist at ING.

August rate cut is inevitable, GBP/USD set to fall below 1.25

“The recent upward surprises in services inflation (5.7%) are due to volatility associated with annual price rises, rather than a significant trend, and while the Bank of England has not previously committed to anything, a rate cut in August is likely if the next inflation report contains no surprises.” ».

“Three rate cuts in 2024 starting in August remains the base case for ING, and is more pessimistic than the two cuts the market has priced in. The August move is priced in at just 60% at the moment.

“This makes us dependent on the downside for the pound, despite the political events in… Euro-zone This means that the EUR/GBP recovery may be delayed further. We expect most of the GBP’s weakness to be channeled through GBP/USDwhich we expect to once again trade below 1.25.”