London, February 6, 2024 – After a robust start to the year, the Pound Sterling (GBP) has experienced a slight pullback in early February, prompting economists at ING to scrutinize the currency‘s outlook.
While the Bank of England (BoE) has maintained relative silence this year, Chief Economist Huw Pill’s comments on Monday hinted at the possibility of a rate cut in 2024. Pill emphasized that action could be taken before inflation reaches the 2% mark. These remarks contributed to a further distancing of EUR/GBP from crucial support levels at 0.8500/0.8525.
ING economists project a bullish profile for EUR/GBP this year, primarily based on the expectation that the BoE will implement more aggressive rate cuts than the European Central Bank (ECB). Anticipating the Sterling-positive event risk associated with the budget in early March, analysts believe the market will then shift its focus to a substantial decline in UK headline inflation throughout the second quarter, coupled with a softer Pound.
As the economic landscape unfolds, investors and analysts will closely monitor the BoE’s stance and potential actions in response to evolving economic conditions, with the EUR/GBP dynamics poised to be influenced by these developments.