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Sterling holds up as ING says BoE likely stays on hold

ING expects EUR/GBP to hover near 0.8550, arguing the UK July CPI release has had little impact on the pair so far.

Reported · Written up by our desk · Major Pairs

ING’s Chris Turner, citing UK economist James Smith, said July UK CPI data has had limited influence on EUR/GBP, with benign food inflation and only a modest rise in the Bank of England’s core services measure to 3.8%.

Turner’s view is that the Bank of England does not need further rate hikes, though he noted that this may not weigh on Sterling immediately.

In a low volatility setting, ING said Sterling’s carry appeal continues to support it, characterizing sterling as one of the highest volatility adjusted currencies in G10.

On positioning for the near term, ING expects EUR/GBP to stay around the 0.8550 area.

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