Nordea FX Strategy Research notes that Super Thursday is coming up in the UK, with the release of the inflation report alongside the august BoE meeting.
“It is probably too early to look for a hike from BoE, but a “hawkish skip” could potentially be on the cards. Inflation is running way above target, but it is likely not enough to warrant a hike with e.g. PMIs losing momentum. BoE haven’t hiked with the composite PMI at this level since 98.
But betting on a firmer tone on the inflation outlook seems reasonable, as inflation (despite the negative surprise in June) is running slightly on the high side of the May projections from BoE,” Nordea adds.
“We don’t expect EUR/GBP to break above 0.90 and see risk/reward tilted to the downside over the super Thursday,” Nordea argues.
Source: Nordea Research
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