Snapshot: EUR/GBP trades 0.8636, down 0.35% on the day, as the Bank of England’s hawkish hold stance clashes with market pricing for a potential ECB hike. Today’s catalyst is ECB President Lagarde’s speaking engagements this afternoon.
- The Bank of England’s 7-2 vote split on its last meeting, with two members voting for a hike, signals persistent inflationary concerns and keeps the pressure on Sterling.
- Watch for any hawkish signals from ECB President Lagarde today that could shift market expectations away from current pricing for a September hike.
Bias into NY: The domestic picture favours Sterling strength given the BoE’s hawkish lean, but EUR/GBP remains sensitive to any hawkish commentary from the ECB, which could see it test higher levels towards 0.8650.