Danske Bank: EUR/GBP set to edge higher but volatility to remain high

Economists at Danske Bank expect the Bank of England to raise interest rates by 25 basis points on Thursday, which will give EUR/GBP a slight boost, but volatility will also be high.

BoE Governor Bailey is expected to reiterate the central bank‘s data-dependent approach at a news conference, though in essence pushing the issue into the future.

Overall, the BoE is expected to highlight continued tightness in the labor market and leave the door open for further policy tightening.

Danske Bank believes that relative interest rates are favorable for EUR/GBP, which is one of several reasons why they tend to buy EUR/GBP dips.