Bank of England stands pat, likely to remain on hold for coming 12 months

As widely expected, the Bank of England kept its monetary policy on hold during its meeting today. The central bank repeated its neutral stance by stating that it can move in either direction. But the Bank of England also kept its hawkish twist in spite of the economic growth being softer than its projection.

Meanwhile, the central bank thinks that the current market pricing of BoE hikes is slightly too weak if the economy lives up to expectations, which is viewed as slightly hawkish, stated Danske Bank. The BoE is still expected to stay on hold for the coming 12 months.

Despite certain hawkish statements on the BoE view on rate hike prospects relative to the market’s pricing, the EUR/GBP traded higher after the announcement by the U.K. central bank.

“We think EUR/GBP remains trapped in the 0.84-0.85 range ahead of the general election on 8 June and target 0.84 in 1M”, added Danske Bank.

In the longer term, the EUR/GBP outlook relies greatly on the outcome of the general election.