EUR/GBP to trend higher as monetary policy divergence weighs on the Pound – Morgan Stanley

Economists at Morgan Stanley Research discuss GBP outlook. Monetary policy divergence could weigh on the British Pound.

BoE is done hiking

“We remain tactically neutral on GBP but see risks skewed to the downside.”

“We expect the BoE to be done with its hiking cycle now, but incoming data over the next few weeks will remain extremely important for the May rate decision.”

“This stands in contrast with the Fed and the ECB where we see more 25 bps hikes in the coming months. This policy divergence should continue to weigh on GBP and keep EUR/GBP trending higher.”