Mood continues to sour ahead of the weekend. This is the main reason for the EUR/GBP correction higher. But economists at ING expect the pair to break below 0.83 as the Bank of England (BoE) will hike rates at its next meeting on February. 

Only a small correction higher in EUR/GBP

“This morning’s quite weak January consumer confidence and December retail sales numbers did not hit the pound particularly hard, with the recovery in EUR/GBP mostly due to the unsupportive global risk sentiment to which the pound is more exposed than the euro.”

“We think that EUR/GBP has further to drop on the back of policy divergence as we expect the BoE to hike rates again in February, a month where we could well see a break below the 0.8300 level in the pair.”