The Bank of England will release its Inflation Attitudes Survey on Friday. Economists at ING analyze Pound Sterling’s (GBP) outlook.
Recent price action showed that levels close to 0.8500 are stretched to the downside
Barring major surprises today, we think EUR/GBP will struggle to find direction into the CPI and BoE events next week.
Recent price action showed that levels close to 0.8500 are stretched to the downside, and the relatively unchanged short-term rate differential does not argue for any break lower.
When we look at the Sonia curve, however, 62 bps of easing by year-end still probably looks too conservative: our economist’s call is for 100 bps, leaving a considerable gap to be covered on the dovish side and giving us reasons to think we’ll see a higher EUR/GBP by year-end.
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