Weak UK GDP numbers have made the pound weaker before a important week with job data, CPI figures, and a possible Bank of England rate cut. Even though markets are still
expecting some easing and could push the euro against the pound higher next year, there's a lot of negative positioning on the pound which could lead to a sudden jump if there's any good news, according to ING's FX analyst Chris Turner.
The Bank of England's interest rate cut is expected this week.
Friday's weak UK October GDP numbers affected the value of the pound. This week is important for UK economic data, decisions by the central bank, and the pound's performance. Before the Bank of England is expected to cut interest rates on Thursday, there are key reports coming up, including jobs data and the November CPI release. For the CPI, overall inflation is likely to decrease a little, but core inflation and services inflation are expected to stay around 3.4% and 4.5% compared to last year.
A BoE rate cut this Thursday is only expected by 85% of people. Doves, like us at ING, think Governor Andrew Bailey will take a bold step and help get a 5-4 vote to lower rates to 3.75%. We also expect another 50 basis points of rate cuts in 2026, which is why we think the EUR/GBP exchange rate could go up to 0.90 next year.
One big risk for people who bet against the British pound is how they position their bets. Right now, some investment firms are holding some of the smallest bets against the pound in more than ten years. If there are any good surprises for the pound, it could lead to a strong reaction from those who bet against it. You can expect to hear about some of these investors buying protection against a fall in the pound, like buying options that give them benefits if the pound goes up compared to the euro.
expecting some easing and could push the euro against the pound higher next year, there's a lot of negative positioning on the pound which could lead to a sudden jump if there's any good news, according to ING's FX analyst Chris Turner.
The Bank of England's interest rate cut is expected this week.
Friday's weak UK October GDP numbers affected the value of the pound. This week is important for UK economic data, decisions by the central bank, and the pound's performance. Before the Bank of England is expected to cut interest rates on Thursday, there are key reports coming up, including jobs data and the November CPI release. For the CPI, overall inflation is likely to decrease a little, but core inflation and services inflation are expected to stay around 3.4% and 4.5% compared to last year.
A BoE rate cut this Thursday is only expected by 85% of people. Doves, like us at ING, think Governor Andrew Bailey will take a bold step and help get a 5-4 vote to lower rates to 3.75%. We also expect another 50 basis points of rate cuts in 2026, which is why we think the EUR/GBP exchange rate could go up to 0.90 next year.
One big risk for people who bet against the British pound is how they position their bets. Right now, some investment firms are holding some of the smallest bets against the pound in more than ten years. If there are any good surprises for the pound, it could lead to a strong reaction from those who bet against it. You can expect to hear about some of these investors buying protection against a fall in the pound, like buying options that give them benefits if the pound goes up compared to the euro.
