GBP: Focus on welfare vote and Bailey – ING

EUR/GBP remains reasonably well bid as expectations for the BoE policy rate, like the Fed rate, have been priced lower over the last month, ING's FX analyst Chris Turner notes

Starmer faces a backbench revolt over welfare reforms

"The market now prices 55bp of BoE rate cuts by year-end, and let's see what BoE Governor Andrew Bailey has to say about the speed of disinflation (especially in average earnings) and the labour market."

"Today, sterling could also face some political risk as Prime Minister Keir Starmer faces a backbench revolt over welfare reforms. The government has already been forced to make about £4bn of concessions to get the bill through – although its passage is not guaranteed. Any failure to get the bill through could hit sterling and gilts on the view that further concessions will have to be made at a time when there is no fiscal headroom."

"EUR/GBP could trade over 0.86 should today's vote reject the proposed reform."