Traders report good bids in the eur/gbp cross just below the 0.8300 level, and they are in the process of being filled in as we write. Hawkish commentary on UK interest rates by several MPC members has the market rethinking the need for rate hikes later this year.
Higher UK rates would likely bolster the pound and reduce the impact of imported inflation. UK industry would be disadvantaged in the process however, potentially cooling the recovery.
Cable reached 1.4787 on the rally while the cross dipped as low as 0.8292.