Economists at ING expect EUR/GBP to rebound towards 0.90 over the course of the year. However, they note that the pair could fall below 0.88 in the near term.

UK annualized inflation softens 

“This morning's UK inflation data missed estimates (5.8% vs est. 6.2% year-on-year). Looking at the details, this is also true of 'core services', the index we know the Bank of England is paying closest attention to.” 

“We would still expect a 25 bps hike in March, but if this trend continues then it would heavily lean towards a pause in May.”

“The EUR/GBP fall could extend and force a break below 0.8800, but we think the bearish story may soon run out of steam and we favour a rebound to 0.9000 over the course of 2023.”