British Pound: High-carry profile supports Sterling against Euro – ING

ING’s Chris Turner says sterling strength reflects both independent GBP gains and Euro weakness in EUR/GBP. Earlier concerns that Pound gains would fade have eased as markets gain confidence in the Bank of England’s tightening path, with ING expecting 25bp hikes in February and November. Turner sees next week’s UK budget as unlikely to derail EUR/GBP’s break below 0.8400, keeping the pair in a 0.8360–0.8430 range.

Sterling supported by BoE tightening

"It seems like sterling is riding on the coat-tails of PM Andy Burnham's popularity. In reality, it looks like there is both independent sterling strength and independent euro weakness at play in EUR/GBP."

"Earlier this summer, we had felt that sterling gains would not last. But now greater market confidence in a Bank of England tightening cycle – we look for 25bp hikes in February and November – makes sterling a high-carry European currency."

"Next week's UK budget looks unlikely to derail the recent EUR/GBP break below 0.8400. And with the euro still having plenty of room to drop on French politics, EUR/GBP can stay offered in a 0.8360-0,8430 range for the time being."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)