ING: The GBP
ING's Rates Strategist, Michiel Tukker, estimates that there is a 20bp risk premium in 10-uear UK gilt uields - some of which could come out of the market during today's UK budget release. The budget itself is not expected to have too much say on the Bank of England's tightening prospects, although any upside surprises on minimum wage adjustments could hawkishly ripple through money markets. Some narrowing in the gilt-bund spread today could be a reminder that the UK looks to be one of the few G7 economies heading in the right fiscal direction into 2027, with forecasts for the budget deficit heading inside 4% of GDP as higher inflation drags more income tax payers into higher tax brackets. EUR/GBP is holding above 0.8350 support and is looking heavy. Barring any surprise budget giveaways that hit gilts, it looks as though EUR/GBP can stay heavy and potentially nudge down to the 0.8315 area. Or, just like EUR/USD, we do not see any clear reasons why EUR/GBP needs to bounce at the moment.
ING's Rates Strategist, Michiel Tukker, estimates that there is a 20bp risk premium in 10-uear UK gilt uields - some of which could come out of the market during today's UK budget release. The budget itself is not expected to have too much say on the Bank of England's tightening prospects, although any upside surprises on minimum wage adjustments could hawkishly ripple through money markets.
Some narrowing in the gilt-bund spread today could be a reminder that the UK looks to be one of the few G7 economies heading in the right fiscal direction into 2027, with forecasts for the budget deficit heading inside 4% of GDP as higher inflation drags more income tax payers into higher tax brackets. EUR/GBP is holding above 0.8350 support and is looking heavy. Barring any surprise budget giveaways that hit gilts, it looks as though EUR/GBP can stay heavy and potentially nudge down to the 0.8315 area. Or, just like EUR/USD, we do not see any clear reasons why EUR/GBP needs to bounce at the moment.