GBP: Sterling finds brief relief – ING

The Pound Sterling (GBP) gained modest support after a less-dovish Bank of England (BoE) message, but expectations of further rate cuts in early 2026 should keep EUR/GBP underpinned near 0.87, ING's FX analyst Chris Turner notes.

BoE less dovish than feared

"Sterling drew some support from a Bank of England press release which was not as dovish as we had expected. Many of the decision-makers cited the fact that expectations for wage growth remained stubbornly high and were concerned about structurally high inflation."

"We suspect that these wage expectations will come down in the New Year in line with lower headline inflation. In all, we continue to expect 25bp rate cuts in February and April, compared to market pricing of just one cut. And that should mean EUR/GBP continues to find support ahead of 0.87."