Broker ING highlighted the potential downside risks for the British pound, pointing to the currency’s recent decline after its peak against the euro. The GBP’s sensitivity to the performance of US equities was highlighted as a contributing factor to its movement.
The firm also noted a decline in volatility for the pair as the market anticipates the release of key UK Consumer Price Index (CPI) figures scheduled for next week.
The British economist from ING suggests that there may be a milder expectation regarding the Bank of England’s (BoE) monetary policy. The company maintains a favorable outlook on the possibility of the EUR/GBP pair rising as market participants could increase their bets on a possible rate cut by the BoE in June.
British financial markets were focused on a speech by the BoE’s Catherine Mann, considered the most hawkish member of the Monetary Policy Committee (MPC).
This event followed comments from Megan Greene, who recently shared a cautiously optimistic perspective on inflation and echoed the sentiments expressed by BoE Governor Andrew Bailey at the last meeting.
ING’s comments come at a time when investors and analysts are closely watching the central bank’s moves, which could have a significant impact on currency valuations. The anticipation of the UK CPI data and the BoE’s potential response are key factors in the company’s analysis of the UK pound’s trajectory.
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