EUR/GBP to remain consolidative, BoE should hike in May – Danske Bank

Analyst at Danske Bank Mathias Mogensen sees the BoE raising rates by 25 bp in May, while the European cross is expected to keep the rangebound pattern near term.

Key Quotes

“The GBP once again came under modest selling pressure yesterday, as the UK service PMI disappointed and the composite PMI fell to the lowest since the EU referendum. Overall, this week’s PMI figures indicate downside risks to activity in coming months and while we see signs that the activity is slowing, it is worth noting that weaker activity can be partly explained by unusually bad weather conditions”.

“We still expect the Bank of England to hike the Bank Rate by 25bp in May, which should curb the upside risk in EUR/GBP in the coming month, and we still look for EUR/GBP to trade within the 0.87-0.8850 range near term”.