GBP: Data and politics weigh on Pound – ING

ING’s Francesco Pesole highlights a heavy UK data calendar, with jobs and inflation likely to confirm cooling labour conditions and subdued core services inflation. If trends persist into March, he sees a Bank of England rate cut as increasingly likely. Combined with political vulnerability for PM Keir Starmer, ING remains bullish on EUR/GBP, targeting 0.88 as the Pound faces depreciation episodes.

BoE cut risks and politics pressure Sterling

"It’s a busy week for the UK calendar. On Tuesday, the January jobs report should show further cooling in the labour market along with slower annual wage growth. If these trends persist into the March data, a Bank of England rate cut next month looks increasingly likely."

"On Wednesday, January inflation data is released. Headline CPI is expected to edge lower due to volatile airfare movements, easing food price pressures, and the waning impact of last year’s private school tax rise, though core services inflation is unlikely to shift much."

"Political noise has eased somewhat, but PM Keir Starmer is still seen as vulnerable, with betting markets assigning roughly a 70% chance he will step down by the end of June. The pound should continue to face depreciation episodes whenever Starmer’s political position deteriorates."

"Combined with our dovish BoE view, we remain bullish on EUR/GBP with a 0.88 target."

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