Broker ING flagged potential downside risks to the British pound, noting the currency’s recent decline from its peak against the euro. Sterling’s sensitivity to US stock performance has been cited as a contributing factor to its move.
The firm also noted lower volatility for the pair as the market awaits the release of key UK Consumer Price Index (CPI) data scheduled for next week.
UK economist ING suggests expectations for the Bank of England’s (BoE) monetary policy could be more dovish. The firm remains bullish on the EUR/GBP upside as market participants may increase their bets on a potential Bank of England interest rate cut in June.
British financial markets were the focus of a speech by the Bank of England’s Catherine Mann, considered the most hawkish member of the Monetary Policy Committee (MPC).
The development follows comments from Megan Green, who recently shared a cautiously optimistic view on inflation, reflecting sentiments expressed by Bank of England Governor Andrew Bailey at its last meeting.
ING’s comment comes as investors and analysts are closely watching the central bank’s actions, which could have a significant impact on the currency’s value. The anticipation of UK CPI data and the potential response from the Bank of England are key factors in analyzing the trajectory of the pound.
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