GBP Weakness Against EUR Expected Amid Dovish Repricing

The British Pound has been experiencing a dovish repricing, which is expected to result in weakness against the Euro. According to ING's Francesco Pesole, the EUR/GBP pair has slipped back to the 0.8550-0.8560 area as the earlier Euro premium fades and bond market calm returns.

Pesole expects the pair to track rate differentials in a low-volatility environment, but still favors higher EUR/GBP. He sees current Bank of England tightening expectations as too hawkish and predicts that the pair will reach 0.870 in coming months.

The UK calendar is relatively empty for the next couple of weeks, which could lead to a low-volatility environment for the EUR/GBP pair.