BANKS | ING Sees Pound Falling Further on Diverging BOE and ECB Policy

ING analysts said the pound could continue to give back recent gains if short-term interest rates in the UK fall and fiscal risks return. According to Jin10, they said inflation may not reach the 4% threshold, which is seen as the trigger point for Bank of England rate hikes, while the European Central Bank may raise rates again. They also said UK Prime Minister Andy Burnham is open to larger policy changes, meaning a bolder budget in October or November cannot be ruled out. ING expects the euro to rise to 0.88 against the pound by year-end and to 0.90 in 2027.