The dramatic repricing of the Bank of England tightening cycle has taken its toll on Sterling over recent weeks. Economists at ING analyze the GBP outlook ahead of the interest rate decision.

The EUR/GBP would test the July high at 0.87 if the BoE surprised with a pause.

The market now only prices a 47% chance of a 25 bps rate hike today. The BoE may not be swayed by some of the volatile factors that drove CPI lower in August and instead, continued high wage growth may be the swing factor that sees it deliver a 25 bps hike after all. That is ING’s call.

A hike would provide GBP/USD with some much-needed support. If not, the route to 1.2100 would be open. Equally, the EUR/GBP will test the July high at 0.87 when the BoE surprises with a pause.