ING expects softer UK jobs, wages, and CPI data to reduce 55bp of Bank of England tightening priced into markets.
A busy UK data week, featuring jobs, wages, and July CPI, may challenge the 55 basis points of Bank of England tightening still priced into markets. ING’s UK economist expects the figures to fall short of justifying further hikes, potentially easing rate expectations.
UK money market curves currently reflect 55bp of tightening, but softer prints could shift sentiment. Historical trends suggest UK activity data often weakens in the second half of the year, adding downside risk to sterling.
ING maintains a slightly negative view on sterling, forecasting EUR/GBP could rebound toward 0.8575-0.8585 if data disappoints. Temporary support from M&A inflows may limit near-term downside.