Synopsis:

ING predicts that the upcoming Bank of England (BoE) meeting will not significantly weaken the GBP, despite the current bearish positioning ahead of the event. The EUR/GBP rate has shown resilience early this week, influenced by recent US monetary policy events.

Key Points:

• EUR/GBP Resilience: The pair has maintained levels above 0.8600, finding support from shifts in the EUR:GBP short-term rate differential post-US monetary developments.
• Sensitivity to Fed Pricing: The sterling curve shows more sensitivity to Federal Reserve movements than to those of the European Central Bank, influencing the current market stance on GBP.
• BoE Meeting Expectations: While the market has adopted a bearish view on GBP due to external factors, ING does not foresee the BoE's upcoming decision causing further significant weakening of GBP.

Conclusion:

ING suggests that the GBP's response to the BoE meeting may be subdued, with limited additional weakening expected. The bank advises keeping an eye on the EUR/GBP pair as it navigates through central bank influences from both the Fed and the BoE.