GBP's Euro Premium Dwindles Amid Bond Market Calm

The British Pound (GBP) has seen its premium against the Euro (EUR) dwindle, and analysts at ING are predicting that it will continue to track rate differentials in a low-volatility environment.

According to Francesco Pesole of ING, the EUR/GBP pair has retreated 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 closely if calm is indeed restored in the bond market, but still favors a higher EUR/GBP, targeting 0.870 in coming months.