EUR/GBP: 0.8500 could be the new floor
EUR/GBP: Assessing BoE Tightening and the Potential for Upside
Aa
Share
ING Economics
INGs global economists and strategists tell you whats happening and is likely to happen in the world of global markets.
Our analysis and forecasts will help you respond and stay a step ahead in the world of macroeconomics, central banks, FX, commodities and everything else in between. Visit ING.com.
Follow ING Economics on social media:
Frustratingly high UK CPI and wage data has kept the market pricing aggressive BoE rate hikes. At some point, as in the US, price data will begin to soften and see the market scale back the amount of BoE tightening expected into 2024. That is why we are still looking for EUR/GBP to trade higher later this year.
For the time being, however, we look for a 25bp BoE hike on 3 August – with the June CPI release on 19 July being a big determinant of whether the BoE hikes 25bp or 50bp.
We find it hard to expect sterling losses on the back of hard-landing fears and expect it will more be the re-assessment of the BoE cycle which will lift EUR/GBP off its lows.