The 1 August BoE rate cut and then some sharp position adjustment finally managed to turn the trend in EUR/GBP, ING’s FX analysts Francesco Pesole and Chris Turner note.

The BoE/ECB policy rate spread is 150bp

“Currently, the policy rate spread between the BoE and the ECB is 150bp. We expect this to halve into 2025 and should mean a gently higher EUR/GBP.”

“In the UK, the 30 October budget from the new Labour government will be important. This could be restrictive and hit sterling with a tighter fiscal/looser monetary policy mix.”

“The Euro could have a rocky October too. Many governments across the region need to get budget consolidation plans into Brussels. Failure to do so could lead to bond market stress.”