GBP: Still unexcited on a EUR/GBP rebound – ING

The big event in the GBP market this week is the release of the October CPI report on Wednesday, ING’s FX analysts Francesco Pesole notes.

‘Core services’ inflation to slow down to 4.3%

“As usual, markets will be looking almost solely at the services inflation figure, which our economist sees accelerating marginally from 4.9% to 5.0%. However, when stripping out categories that are less relevant for the Bank of England, we see a substantial slowdown to 4.3% in ‘core services’ inflation.”

“That would be good news for the BoE, but probably not enough to justify another cut in December. Incidentally, markets might focus a bit more on the ‘non-core’ services CPI figure, sticking to cautious BoE pricing and put a cap on the recent tentative rebound in EUR/GBP.”

“Our view on the pair remains moderately bearish in the near term as we see any dovish repricing in BoE expectations coming after a December outsized ECB cut.”