ING: The GBP

The spotlight this week is firmly on Bank of England speakers. Catherine Mann speaks today after voting for a hike at both the July and September meetings. Megan Greene and Huw Pill, who also backed hikes, are due on Thursday. The same day brings appearances from Andrew Bailey and Clare Lombardelli, the two neutral MPC members viewed as the most likely swing votes ahead of the November meeting. Markets currently price 21bp for next month, 36bp by year-end and 89bp by June. Although the risk of a November move has risen materially, the broader Sonia curve still looks far too hawkishly priced in our view. Translating that into a EUR/GBP rally remains challenging. Elevated oil prices should keep downward pressure on repricing in the Sonia curve, while the euro continues to face significant domestic headwinds. A retest of the mid-July lows around 0.846 appears the most likely near-term move, and we suspect EUR/GBP may reach 0.840 before clear support emerges.