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EUR/GBP slips toward 0.8550-0.8560 as Euro premium fades

ING says the pair is likely to track rate differentials in a low-volatility backdrop, while still targeting 0.870 over the coming months on relatively hawkish Bank of England expectations.

Reported · Written up by our desk · Major Pairs

ING’s Francesco Pesole said EUR/GBP has eased back into the 0.8550 to 0.8560 area as an earlier Euro premium faded and bond markets returned to a calmer tone, according to FXStreet.

Pesole expects the exchange rate to move broadly in line with rate differentials in a low-volatility environment, but he still favors higher EUR/GBP, pointing to a 0.870 target in the coming months.

He added that his outlook is tied to perceptions that Bank of England tightening expectations are currently too hawkish, implying the market positioning may not yet fully reflect the path of policy rates.

FXStreet also noted that the broader US dollar picture has weakened as USD recovery lost traction amid renewed diplomatic hopes related to the Middle East conflict, with EUR/USD recovering toward 1.1700 in European trading.

Latest closeEUR/USD 1.157 ▲0.4%

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