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EUR/GBP unlikely to recover further in the near term – ING

The EUR/GBP cross has recovered from the 0.8500 level. However, ING economists do not expect the pair to prolong its recovery.

Strengthening the national economy

In the United Kingdom, growth expectations have been revalued again, as PMI indices rose again in February. If the ECB had to convince markets that rate cut expectations were too optimistic, the Bank of England has the “privilege” of letting the data speak for itself.

The rebound of EUR/GBP from the excessively cheap low of 0.8500 has not surprised us. But We have some doubts that the crossing can recover more in the short termas markets may be more inclined to push the ECB's 2024 easing expectations to 100 basis points (now 90 basis points) rather than pricing in three full UK cuts (now 62 basis points). All in all, our medium-term view remains bullish on EUR/GBP, thanks to policy divergence.

Source: Fx Street

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