EUR/GBP appears to be attracting consumers across the 0.850 degree and is awaiting one other clear-cut GBP bullish catalyst for a break decrease, ING’s FX analyst Francesco Pesole notes.
Future fee cuts to be ‘gradual and cautious’
“We not too long ago mentioned how the plans to enhance the UK-EU commerce relationship have unlocked some upside for GBP, though markets might now be awaiting some extra tangible developments earlier than constructing extra sterling longs.”
“In home UK occasions, Thursday ought to see the Financial institution of England slicing charges by 25bp. That is broadly anticipated by consensus and absolutely priced into the Sonia curve. As mentioned in our economist’s preview, we count on an 8-1 vote break up (one vote for a 50bp lower) and no adjustments in ahead steering (future cuts to be ‘gradual and cautious’).”
“We predict EUR/GBP might stabilise round 0.850 for now as a well-telegraphed BoE lower shouldn’t set off main strikes. In the end, the euro’s larger publicity to potential positioning changes means the dangers stay skewed to the draw back for EUR/GBP.”
