Sterling Resilience Continues Amid BoE Hold: Carry Appeal Keeps EUR/GBP Rangebound

The British Pound has maintained its resilience despite the Bank of England's decision to keep interest rates on hold. According to ING's Chris Turner, citing UK economist James Smith, the July UK Consumer Price Index (CPI) had a limited impact on EUR/GBP.

The data showed that food inflation remains benign, and the BoE's core services measure of inflation has picked up slightly to 3.8% year-on-year. However, this is not seen as enough to trouble the Bank.

ING's call is that the BoE does not need further hikes, although this may not weigh on Sterling until later in the year.

In a low-volatility environment, Sterling benefits from strong carry appeal, and EUR/GBP is expected to hover around 0.8550.