According to Jinshi Data, analysts at Mitsubishi UFJ said that if the Bank of England is more aggressive than expected in cutting interest rates, the pound may underperform later this year. The Bank of England voted 6 to 3 to keep interest rates unchanged at its December meeting, with three policymakers leaning towards a rate cut.
Analysts pointed out that this shows that the composition of the Bank of England's Monetary Policy Committee is changing and is no longer so cautious about rate cuts. They believe that the interest rate market has priced in a low rate cut by the Bank of England, and the decline in yields may lead to poor performance of the pound, which in turn drives EUR/GBP higher.