Broker ING noted the potential downside risks for the British pound, noting the currency's recent decline from 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 observed a decrease in volatility for the EUR/GBP pair as the market anticipates the release of key Consumer Price Index (CPI) figures in the UK scheduled for next week.
ING's UK economist suggests that there may be a dovish tilt in expectations for the Bank of England's (BoE) monetary policy. The firm maintains a favorable outlook on the possibility of the EUR/GBP pair rising, as market participants might increase their wagers on a potential interest rate cut by the BoE in June.
The British financial markets were focused on a speech delivered by Catherine Mann of the BoE, who is regarded as the most hawkish member of the Monetary Policy Committee (MPC).
This event followed comments made by Megan Greene, who recently shared a cautiously optimistic perspective on inflation, mirroring sentiments expressed by BoE Governor Andrew Bailey at the last meeting.
ING's commentary comes as investors and analysts closely watch the central bank's moves, which could significantly influence currency valuations. The anticipation of UK CPI data and the BoE's potential response are key factors in the firm's analysis of the GBP's trajectory.
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