Synopsis:

ING anticipates that upcoming UK employment and CPI data will likely reinforce expectations for further easing by the Bank of England (BoE). With a dovish outlook on both data points, ING suggests that the market might be underestimating the extent of BoE rate cuts for the rest of the year.

Key Points:

1. Upcoming UK Data:

   • Key UK employment and CPI data are due this week, with ING's UK economist, James Smith, holding a slightly dovish view on both.
   • Expectations are for these data points to come in slightly below market expectations, which could further fuel BoE easing sentiment.

2. Market Pricing of BoE Rate Cycle:

   • ING believes the market is being too conservative in pricing the BoE rate cycle for the remainder of the year.
   • They anticipate that EUR/GBP could find solid support in the 0.8500/0.8550 range as a result.

3. BoE Communication:

   • Official communication from the BoE has been sparse, with no BoE speakers scheduled for the next two weeks.
   • ING notes that BoE representation at the upcoming Jackson Hole symposium may come from former Deputy Governor Ben Broadbent, which could offer additional insights.

Conclusion:

ING expects that this week's UK employment and CPI data will likely bolster expectations for further BoE easing. With the market possibly underestimating the extent of rate cuts, EUR/GBP may find support in the 0.8500/0.8550 area. The lack of BoE communication in the near term may leave markets to speculate based on the upcoming data and any insights from the Jackson Hole symposium.