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Yesterday Bank of England left its monetary policy unchanged, keeping the main rate at 0.5% and the QE amount at £375 billion annually. Only one Monetary Policy Member voted for a rate hike, as was broadly expected. According to the latest BOE minutes, growth seems to have slowed down a bit and risk appetite is poor too.
According to the Danske Bank, February meeting will be more important as it will update inflation report alongside the rate announcement, which provides insight into how the recent development has affected the BoE's outlook for growth, employment and inflation.
The first interest rate hike is expected in Q2 16. The logic behind this is monetary policy in the UK depends on the oil price and the economic outlook in Europe to a larger extent than Fed policy.
Danske bank targets EUR/GBP 0.73 in 3M, 0.71 in 6M and 0.75 in 12M. In the short term, it expects GBP to remain under pressure in a negative risk environment.
