Potential Downside Risks for the British Pound Highlighted by Broker ING

Recent Decline in GBP Against Euro

Broker ING has pointed out potential downside risks for the British pound, noting its recent decline from its peak against the euro. The currency’s sensitivity to the performance of US equities has been highlighted as a contributing factor to its movement.

Decrease in Volatility and Anticipation of CPI Figures

ING also observed a decrease in volatility for the GBP/EUR pair as the market anticipates the release of key Consumer Price Index (CPI) figures in the UK scheduled for next week.

Dovish Tilt in Expectations for BoE’s Monetary Policy

ING’s UK economist suggests that there may be a dovish tilt in expectations for the Bank of England’s monetary policy. The firm maintains a favorable outlook on the possibility of the EUR/GBP pair rising, as market participants might increase their wagers on a potential interest rate cut by the BoE in June.

Focused on Speeches from BoE Members

The British financial markets were focused on a speech delivered by Catherine Mann of the BoE, who is regarded as the most hawkish member of the Monetary Policy Committee (MPC).

This event followed comments made by Megan Greene, who recently shared a cautiously optimistic perspective on inflation, mirroring sentiments expressed by BoE Governor Andrew Bailey at the last meeting.

Importance of Central Bank’s Moves

ING’s commentary comes as investors and analysts closely watch the central bank’s moves, which could significantly influence currency valuations. The anticipation of UK CPI data and the BoE’s potential response are key factors in the firm’s analysis of the GBP’s trajectory.

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