GBP: Widely expect BoE cut this week - ING

EUR/GBP seems to be attracting buyers around the 0.850 level and is awaiting another clear-cut GBP bullish catalyst for a break lower, ING's FX analyst Francesco Pesole notes.

Future rate cuts to be 'gradual and careful'

"We recently discussed how the plans to improve the UK-EU trade relationship have unlocked some upside for GBP, although markets may now be awaiting some more tangible developments before building more sterling longs."

"In domestic UK events, Thursday should see the Bank of England cutting rates by 25bp. This is widely expected by consensus and fully priced into the Sonia curve. As discussed in our economist's preview, we expect an 8-1 vote split (one vote for a 50bp cut) and no changes in forward guidance (future cuts to be 'gradual and careful')."

"We think EUR/GBP may stabilise around 0.850 for now as a well-telegraphed BoE cut should not trigger major moves. Ultimately, the euro's greater exposure to potential positioning adjustments means the risks remain skewed to the downside for EUR/GBP."