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ING strategist Francesco Pesole argues that EUR/GBP faces limited further downside after slipping below 0.8700, citing UK political risks and stretched Bank of England (BoE) tightening expectations as key factors. The pair's decline is being offset by these fundamental pressures, which counterbalance broader risk-on market sentiment. Pesole highlights that while the cross has weakened, the interplay between BoE policy uncertainty and UK political instability creates a floor for the currency pair.
For traders, this analysis suggests a cautious approach to shorting EUR/GBP, as the cross may find support near 0.8700. The BoE's aggressive tightening cycle and potential UK political developments could act as a buffer against deeper declines. Market participants should monitor upcoming BoE policy statements and UK political updates for directional clues.
Looking ahead, the key focus remains on BoE rate decisions and UK economic data releases. A breakdown below 0.8700 could reignite bearish momentum, while a rebound above this level may signal renewed bullish bias. Traders should also assess broader European risk sentiment and its impact on cross-currency dynamics.
