The Bank of England’s narrowly approved rate cut last week can generate some long-lasting momentum for the pound, should data endorse the MPC hawks’ inflation concerns and relaxed stance on the jobs market slowdown, ING's FX analyst Francesco Pesole notes.

EUR/GBP is highly UK data-dependent

"Tomorrow, we’ll see employment data for July. Consensus is looking for a -18k payroll print after June’s -41k. There are admittedly risks of a softer-than-expected initial print followed by an upward revision in the coming months, as we've seen in recent instances. Markets may treat those with a bit more caution for this reason, as well as the BoE’s lack of concern about jobs."

"On Thursday, second-quarter GDP should show the downward tariff distortion observed in many countries. We expect a 0.2% quarter-on-quarter print, slightly above the consensus 0.1%."

"EUR/GBP is highly UK data-dependent at this stage. There is a path to move below 0.860 if markets keep pricing out BoE cuts, but residual easing expectations may prove hard to eradicate, and the euro’s strength has been difficult to counter. We still see 0.870 as a more realistic target into the fourth quarter."