ING Warns of Dovish Risks Ahead of Bank of England Meeting
The British Pound has shown resilience against the US Dollar, but its uptrend sustainability is being questioned by analysts at ING. According to Francesco Pesole, EUR/GBP has fallen around 0.5% since Friday, partly due to precautionary positioning ahead of the Bank of England meeting on Thursday.
Pesole notes that the risks are skewed dovishly for the BoE, meaning that policymakers may hold back from making drastic changes in monetary policy. This is in contrast to market expectations, which have priced in a significant interest rate hike by December and June.
As a result, Pesole doubts that EUR/GBP can fall much further and sees multiple upside risks in the coming weeks. These include the BoE's monetary policy decision, potential fiscal headlines ahead of the late October budget, and growing pressure on Downing Street to allow independence referendums in Scotland, Wales, and Northern Ireland.
Pesole maintains a target of 0.87 for EUR/GBP, suggesting that the currency pair will continue to rise in the near future.