ING: The Bank of England has more room to adjust rate hike expectations, GBP may weaken against EUR

Golden Ten Data reported on April 1 that Francesco Pesole from ING stated in a report that the pound may weaken against the euro because the market has more room to lower expectations for the Bank of England’s interest rates compared to the European Central Bank. Officials from the Bank of England have been cautious in their wording regarding rate hikes, and the bank was prepared to cut rates even before the outbreak of the Iran war. In addition, the UK economy may be one of the economies most affected by shocks in energy prices. ING believes that the market will fully price in expectations that the Bank of England will no longer raise interest rates. According to LSEG data, the UK money market is currently pricing in a cumulative rate hike of 48 basis points through December, while the expectation for the European Central Bank stands at 62 basis points.