ING’s Francesco Pesole notes that EUR/GBP is trading modestly above his team’s short‑term fair value estimate. While Bank of England communication and UK data, including PMIs and inflation, could move rate expectations, he argues that unstable global risk sentiment is likely to cap significant downside in EUR/GBP, limiting the potential for sustained Pound outperformance.

Risk sentiment caps EUR/GBP downside

"Today, we’ll hear from a dove (Piero Cipollone) as well as Chief Economist Philip Lane. President Christine Lagarde is due to deliver remarks on Wednesday and there are plenty of other speakers to watch."

"While Bank of England policymakers aren’t as active in off-meeting comments as Fed or ECB members, we’ll hear from Chief Economist Huw Pill tomorrow, and from Megan Greene, Sarah Breeden and Alan Taylor later this week. Here, rate expectations should also be very sensitive to any remarks."

"On the data side, UK inflation for February is published on Wednesday but should not matter much given the March developments so far. Tomorrow’s PMIs will be more interesting."

"EUR/GBP is around 0.5% above its short-term fair value in our estimates, but risk sentiment instability argues against major downward corrections."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)