British Pound: Seen lower against Euro and US Dollar – ING
The British Pound is forecasted to weaken against both the Euro and the US Dollar according to ING's analysis. This view is shaped by ongoing macroeconomic pressures including inflation dynamics and interest rate trajectories in both the UK and the Eurozone. The Pound's position is particularly sensitive with recent rhetoric from the Bank of England suggesting a cautious approach to tightening, potentially placing downward pressure on GBP. With the Euro's strength appearing more resilient, market dynamics may favor further depreciation of GBP in the near term.
Where it sits in our coverage
Our consensus EUR/GBP target sits at 1.1717 (median among 11 firms), with Commerzbank at the upper bound (1.2200) and Citi at the lower end (1.1300). ING's view aligns closer to the higher end of this spectrum, predicting 1.1700 by March and 1.2200 by June, reflecting an expectation of GBP challenges against the Euro.
How firms align
Key firms such as Commerzbank and Morgan Stanley echo a bearish outlook on the Pound, projecting targets of 1.1900 and 1.2000 for March, respectively. In contrast, firms like BNP Paribas appear slightly more conservative with a lower forecast of 1.1600, illustrating differing perspectives within the consensus on GBP's path. See our reports on /reports/commerzbank and /reports/bnp.
What the data shows
Recent revisions by firms including SocGen and Scotiabank reflect a downward trend for the GBP, with projections dipping around 1.1700 for March. For additional insights on currency movements, refer to our research at /research/eurusd-ecb-rate-path.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01ING forecasts further GBP weakness against both USD and EUR in the coming months.
- 02Traders should closely watch monetary policy signals from the Bank of England.
- 03Given a target of 1.2200 for the Euro by June, GBP's projected levels may see increased volatility.
- 04Watch for inflation data impacting currency sentiment.
Market implications
Next, it will be critical to monitor upcoming inflation reports and any indications from the Bank of England as they may shift GBP sentiment. The consensus target for EUR/GBP is currently at 1.1717, which appears to be a significant level to observe amidst potential shifts in monetary policy.
Risks to this view
This bearish outlook would be invalidated if economic data showed stronger-than-expected growth in the UK, prompting a hawkish shift from the Bank of England. A sudden rally in GDP growth or inflation could reverse GBP's downside trajectory, impacting investor expectations.
Sentiment by currency
USD+EUR+JPY~GBP-Composite USD score: +0.60
Sources & References
How we cover this story
Other coverage on this pair
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