The main event in sterling markets today is a speech by the Bank of England’s Catherine Mann, the MPC’s most hawkish member, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.
EUR/GBP may hold near 0.8300 gravity line
“Markets will be attentive to any comments on the implications of the recent budget for monetary policy and any details on the latest employment/wages figures. Given his extremely hawkish stance, we suspect he could emphasize – if at all – the inflationary aspect of the rise in the government spending and perhaps focus more on the persistent wage figure rather than the rising unemployment rate in September.”
“Ultimately, the GBP curve does not need many more hawkish cues to move at this stage. Markets are pricing in little to no chance of a cut in December, and just 50 basis points in total by September 2025. In In our opinion, the risks remain tilted towards a moderate revaluation and a consequent negative impact on the pound sterling, although a downward revaluation of rates may take time to materialize as markets will act cautiously in assessing the implications “inflationary aspects of the budget.”
“The soft momentum for the EUR means that EUR/GBP could hold near the 0.8300 gravity line.”
Source: Fx Street
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