GBP: Case for higher EUR/GBP is intact – ING

EUR/GBP has stayed generally pressured, likely due to the higher beta of the pound and the improvement in risk sentiment, ING’s FX strategist Francesco Pesole notes.

A short-term target of 0.86 in EUR/GBP

“We remain quite confident about a rebound though, and there are two potential triggers today (ECB wage data) and tomorrow (Bank of England Governor Andrew Bailey’s speech in Jackson Hole).”

“Markets may be inclined to price out some ECB easing, but PMIs may also have a say in EUR/GBP price action. The surveys have been a testament to the growing growth sentiment divergence between the eurozone and the UK, which has helped keep EUR/GBP capped. However, markets are clearly more accustomed to negative growth news in the eurozone.”

“We maintain a short-term target of 0.86 in EUR/GBP as we see short-term spreads move in favour of the euro leg over the coming weeks.”