EUR/GBP briefly dipped under 0.8500 on the soft eurozone PMI releases only to surge to 0.8565 on the soft UK services PMI release. Economists at ING analyze the pair’s outlook.
Short-term rates remain the key driver
Soft UK data took a big 15 bps out of pricing for the Bank of England (BoE) tightening cycle. We still think the BoE will still not deliver on the 60 bps of market pricing and EUR/GBP could return to the 0.87 area later this year.
The only UK data of note today is the August CBI Retail Sales numbers and we suspect EUR/GBP continues to trade a 0.8500-0.8550 range, while Cable is quite steady near 1.2700 too.
