BoE offered few reasons to turn bearish on the Pound, in the opinion of economists at ING.

EUR/GBP should climb back to 0.9000 in the second half of the year

“The BoE retained its flexibility and kept the door open for more rate hikes if inflation proves persistent. While we don’t exclude one final June hike, our base case is that we have reached the peak of the BoE tightening cycle as inflation will start to rapidly decelerate this year.”

“Still, the Sonia curve continues to price in around 38bp of tightening to the peak, which leaves the pound at risk of a rate-driven negative impact down the stretch. We feel this will materialise in EUR/GBP, which should climb back to 0.9000 in the second half of the year as EUR and GBP rates re-converge, in our projections.”

“For now, however, there aren’t many convincing reasons to call for GBP underperformance against its main peers in the near term.