EUR/GBP: Risks skewed to the upside awaiting a hawkish Fed – ING

EUR/GBP has surged beyond the 0.8800 level. The pair could extend its rise on a hawkish Federal Reserve, according to economists at ING.

Downside risks from a hawkish Fed

“We think there is now less scope for the ECB to push the Euro even higher, which means more fuel to the EUR/GBP rally may be mostly a function of risk sentiment rather than monetary policy divergence.”

“Since the Pound tends to be more sensitive to global risk sentiment than the Euro, the risks are skewed to the upside for EUR/GBP today given our baseline scenario for a hawkish Fed weighing on risk assets.”

“Cable may drop to the 1.2200 mark today.”

See – Fed Preview: Forecasts from 16 major banks, dialing down rate hike to 25 bps