EUR/GBP Bulls Eye Resistance at 0.8600 Amid BoE Wait-and-See Stance
The EUR/GBP currency pair is trading flat around 0.8600 on Friday and heading for a weekly gain, despite the Bank of England's (BoE) wait-and-see stance weighing on the British Pound (GBP).
The BoE has kept its benchmark rate unchanged at 3.75% this year, leaving it behind the Federal Reserve and European Central Bank (ECB) in raising interest rates.
However, BoE Governor Andrew Bailey acknowledged that 'there has been a tightening of financial conditions' but emphasized that the UK is seeing 'quite subdued pass-through of energy prices'. He warned that if this continues, it could become harder to maintain the current no-hike stance on Bank Rate.
Strategists at Brown Brothers Harriman disagree with market pricing and believe the BoE may not need to tighten as much as expected. They argue that the UK economy is already operating below capacity, and the 3.75% Bank Rate is near the top of the BoE's estimated neutral range.