Pound Sterling (GBP) ticked higher in response to the less-than-dovish BoE statement. Economists at ING analyze GBP outlook.

EUR/GBP can probably trace out a 0.8500-0.8700 range over the coming months

No change from the BoE but Sterling and UK market interest rates nudged higher after two members of the Monetary Policy Committee continued to vote for a 25 bps rate hike.

We doubt GBP needs to embark on a major rally, however, given that we think UK inflation will ultimately play catch-up with the disinflation trends seen in the US and the Eurozone.

We think EUR/GBP can probably trace out a 0.8500-0.8700 range over the coming months, while a strong Dollar environment can keep GBP/USD near the 1.2600/1.2700 region this quarter.