Key Moments
- EUR/GBP fell to 0.870, a move ING links primarily to Sterling’s heightened sensitivity to the recent equity rally.
- ING expects European Central Bank rate expectations to remain firm while Bank of England pricing could turn more dovish if energy prices continue to decline.
- BoE communications from upcoming speeches may allow markets to reduce expectations to below one hike this year, with ING projecting EUR/GBP to move back toward 0.880 this quarter.
Limited Downside Seen After EUR/GBP Drop
Francesco Pesole of ING argues that the recent decline in EUR/GBP to 0.870 leaves little room for further weakness in the cross. He attributes the move largely to Sterling’s (GBP) stronger reaction to the sharp upswing in equity markets.
Pesole anticipates that communication from the Bank of England (BoE) will help steer EUR/GBP back toward 0.880 over the course of this quarter.
ECB Expectations vs BoE Repricing
According to Pesole, expectations around European Central Bank policy are likely to remain relatively unchanged, even as conditions evolve elsewhere. In contrast, he sees greater scope for a dovish shift in how markets price the BoE’s policy path, particularly if energy prices continue to fall.
He notes that the BoE had already been prepared to cut rates before the war started and highlights ING’s strong view that second‑round effect risks in the UK are “significantly lower than in 2022.”
Role of Upcoming BoE Speakers
Pesole points to forthcoming comments from key BoE policymakers – Governor Andrew Bailey, Catherine Mann, and Megan Greene – as a potential catalyst for further adjustment in market expectations. He suggests that these appearances could give investors an opening to scale back pricing for additional tightening to below one hike this year, which is currently around 30bp.
Such a repricing, in his view, would offer “bullish fuel” for EUR/GBP and support ING’s forecast that the pair will “return to 0.880 this quarter.”
EUR/GBP Levels and Policy Context
| Metric / View | Detail |
|---|---|
| Recent EUR/GBP low | 0.870 |
| ING target for this quarter | 0.880 |
| Current market pricing for BoE hikes | Approximately 30bp (just under one hike this year) |
| Key BoE speakers flagged | Governor Andrew Bailey, Catherine Mann, Megan Greene |
Analyst Commentary
Pesole summarizes ING’s stance as follows: “We struggle to see much downside potential in EUR/GBP following the drop to 0.870, which largely reflected sterling’s higher sensitivity to the sharp equity rally.”
On the policy backdrop, he adds: “… EUR rate expectations may prove sticky, while Bank of England dovish repricing could come through more smoothly if energy prices keep declining. After all, the BoE was already ready to cut before the war began, and we have a conviction view that second‑round effect risks in the UK are significantly lower than in 2022.”
Regarding potential catalysts, he notes: “Some BoE speakers (Governor Andrew Bailey, as well as Catherine Mann and Megan Greene) next week could offer markets an opportunity to trim pricing below one hike this year (currently 30bp), providing some bullish fuel for EUR/GBP. We still expect the pair to return to 0.880 this quarter.”





