ING's Francesco Pesole focuses on Bank of England (BoE) communication, noting mixed but generally hawkish tones from Megan Greene and Sarah Breeden, while Alan Taylor remains dovish. He expects greater room for dovish repricing in the Pound curve under a de-escalation scenario. Pesole maintains that EUR/GBP can move above 0.8700 over coming weeks as UK rate expectations adjust lower.

BoE speakers and de-escalation shape Pound

"We'll hear from three Bank of England MPC members today: Sarah Breeden, Alan Taylor and Megan Greene. Greene already spoke yesterday and reiterated her inflation concerns and hawkish spin. Breeden claimed she would have voted for a cut at last week's meeting if it wasn't for the energy price spikes, but was generally hawkish too. Let's see if signs of potential de-escalation make her turn slightly more dovish."

"Alan Taylor was the only dove who stayed dovish last week, arguing that the implications for medium-term inflation from temporary energy shocks aren't significant and the bar for hikes is high. But more dovish comments from him won't come as a surprise to markets."

"We still see some upside risks for EUR/GBP due to the larger room for dovish repricing in a de-escalation scenario for the GBP curve. A move past 0.8700 in the coming weeks remains our baseline."

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