Sterling strikes back at the euro, backed by a hawkish Bank of England (BoE). Economists at ING expect the EUR/GBP to move back lower towards 0.8350.

Sterling enjoys the BoE re-pricing

“Look at OIS pricing for the BoE policy rate in March 2023, market pricing has shifted from 2.72% in late July to close to 3.40% yesterday. And on top of that, UK inflation quickened to 10.1% year-on-year in July, faster than expected and a new 40-year high.”

“Any further extension in the gas price surge could send EUR/GBP all the way back to 0.8350. As an exporter of natural gas, the US does not face these challenges and our bias in GBP/USD remains sub 1.20.”