Key Moments
- The British pound held firm after the Bank of England struck a less dovish tone than markets expected, according to ING.
- At the same time, BoE policymakers flagged ongoing concerns around strong wage growth and underlying inflation pressures.
- Meanwhile, ING still expects two 25 basis point rate cuts and sees EUR/GBP holding above 0.87.
BoE Tone Lends Support to Sterling
Investing.com — The British pound found support on Friday after the Bank of England released a policy statement that appeared less dovish than anticipated, ING said.
In particular, several BoE policymakers pointed to continued risks from high wage growth expectations and sticky inflation. As a result, sterling drew modest support in early trading.
ING Outlook on Wages, Policy, and EUR/GBP
Looking ahead, ING expects wage growth expectations to ease in early 2026 as headline inflation continues to slow.
However, the bank still forecasts two 25 basis point interest rate cuts, one in February and another in April. This view contrasts with market pricing, which currently implies only a single cut over that period.
Consequently, ING believes the euro-pound pair should remain supported above the 0.87 level.
Rate Expectations and FX Implications
| Item | ING View | Market View (as cited) |
|---|---|---|
| February BoE move | 25 basis point cut | Single cut over February–April period |
| April BoE move | 25 basis point cut | |
| EUR/GBP level | Support expected above 0.87 | Not specified |
| Wage expectations | Seen declining in early 2026 | Not specified |
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