This week, the Bank of England meeting is the big highlight for the GBP market. Economists at ING expect more weakness in the pound after the announcement, which could drag the GBP/USD pair down to the 1.20/21 area.

EUR/GBP may test 0.86

“We expect to see a marked divergence within the MPC at this meeting, as we forecast a three-way vote split: some members voting for no change, some for a 50 bps hike, and the overall majority for a 25 bps move.” 

“With markets currently pricing in seven 25 bps rate hikes by year-end, we think the risk of a dovish repricing in the GBP curve after this week’s meeting is high, and we expect more weakness in the pound after the announcement.” 

“Unless global sentiment rebounds, a move to the 1.20-1.21 area in cable appears to be on the cards, while EUR/GBP may test 0.86.”