Sterling May Slide if BoE Cools Rate-Hike Expectations
Danske Bank analysts say sterling could weaken against the euro if the Bank of England hikes as expected but signals less tightening ahead.
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what happened
Danske Bank analysts say sterling could fall if the Bank of England raises rates as expected but its communication casts doubt on the high market bets for further tightening. They expect the BoE to vote by a solid majority for a 25 basis point increase to contain inflation risks.
The analysts note that markets now price in 100 basis points of tightening over the coming year, which they see as excessive. Additional hikes cannot be ruled out, but expectations can shift quickly. They say the risks lean toward the BoE sounding more cautious about future increases, which could weaken sterling against the euro.
The euro rose to a 19-month low of 0.8328 pounds, according to LSEG data.
why it matters
For FX traders, the wording of the central bank's guidance may matter more than the decision itself, especially against the euro, where sterling could lose ground.
market impact
GBP/EUR: a softer BoE tone on future hikes would pressure sterling against the euro
- Sterling vs euro pressure down — a softer BoE outlook could trim bets on further rate rises that support the pound
tags
instruments
sources
- Sterling Could Fall if BOE Dampens Elevated Rate-Rise Bets — Market Talk, 30 October 2026 at 13:44 UTC
prepared by the newsmetry newsroom with ai assistance from the sources listed below. not investment advice.
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