ING says the euro may regain ground against sterling after the EUR/GBP pair fell below its short-term fair-value estimate, putting currency traders’ focus on the Bank of England’s next rate decisions.
ING puts the gap at 2.6% to 2.8% and says French-related pressure on the euro explains only part of the pair’s weakness. In its view, a move toward 0.840 is the likeliest outcome over the coming weeks, though the bank presents this as an assessment, not a certainty. EUR/GBP shows how many pounds one euro buys, so a higher reading would mean some recovery for the euro against sterling.
At its meeting ending Nov. 4, the Bank of England’s Monetary Policy Committee voted eight-to-one to raise Bank Rate by 0.25 percentage points, to 4%. Bank of England Monetary Policy Committee member Catherine L Mann preferred a 0.5-percentage-point increase, which would have put the rate at 4.25%. UK consumer price inflation was 3.5% in September.
The Bank’s latest projection put inflation at about 4.5% in the first quarter of 2027 and about 5% in the second quarter, using average energy prices over the 15 U.K. working days through Oct. 27. The Bank’s minutes say higher energy prices affect household and business bills. The minutes cite agency intelligence suggesting many firms were absorbing higher costs partly through lower profit margins and say those costs could eventually pass through to consumers if the energy shock persists.
ING says the November vote strengthened its expectation of another rate increase in February 2027, with a December move still possible. The bank also said agreement on another increase may be harder to reach and that markets were pricing in three further cuts too aggressively. The view follows ING’s earlier assessment that rate expectations were supporting sterling against the euro.
The Bank of England’s next rate decision is scheduled for Dec. 17, 2026, followed by its meeting on Feb. 4, 2027.
