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BoE rate expectations have been volatile since wages and CPI unexpectedly rose last week. Poor retail sales on Friday knocked more than 10 basis points off peak bank rate expectations, as measured by the Sonia rate. The market is currently expecting interest rates of 5.95-6.0%, but today’s UK PMI could again influence market pricing.
EUR/GBP may try again to break above 0.8500 today, but the sustainability of levels below 0.8500 is doubtful unless the market believes that further rate hikes in the UK, or that the euro zone will not tighten.
