According to Rabobank, market attention has now shifted away from the rate cut itself toward the MPC voting split and forward guidance, which are seen as more relevant for expectations around February and the months ahead.
While the move was fully priced in, the bank warns that signs of a more persistent dovish tilt within the committee leave the Pound exposed. This vulnerability has been reinforced by November’s UK inflation figures, which surprised to the downside across headline, core, and services components
Rabobank notes that inflation remains above the BoE’s 2% target, allowing policymakers to maintain a cautious tone rather than commit to a rapid succession of additional cuts. Still, that nuance offers only limited near-term support for Sterling.
From a broader perspective, risks remain skewed against the Pound. The BoE is expected to be among the few G10 central banks still easing policy into 2026, a factor likely to weigh on the currency over time.
The bank concedes that the euro may face episodic pressure if the ECB actively pushes back against speculation of rate hikes. However, such episodes are unlikely to derail the medium-term trend.
With Sterling ranking among the weaker G10 currencies over the past six months and UK growth momentum subdued, Rabobank continues to view EUR/GBP pullbacks as buying opportunities.