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Senior Analyst at Danske Bank Morten Helt sees the Bank of England raising its key rate next month despite poor UK CPI results seen yesterday.

Key Quotes

“In the FX majors, EUR/GBP has reached new highs following yesterday’s disappointing inflation release and EUR/GBP bounced above 0.89 while GBP/USD temporarily broke below the key support level at 1.3050″.

“While the lower-than-expected inflation in the UK on the margin reduces the probability of a rate hike August, it remains our base case that the Bank of England will raise the Bank Rate by 25bp on 2 August”.

“Market pricing of an August hike declined 2bp to 19bp yesterday. Given the already high pricing of an August rate hike and the risk of continued political uncertainty in the UK related to Brexit, we prefer staying side-lined in the cross for now”.