EUR/GBP can retest the 0.8573 lows – ING

The UK Consumer Price Index (CPI) report will be released on Wednesday. Economists at ING analyze the Pound Sterling (GBP) outlook ahead of inflation data.

Services inflation to stay above 6%

Services inflation is what matters the most for the Bank of England at the current stage and we expect to see it at 6.1% this week, considerably below the Bank of England's estimates. Despite the improvement in services disinflation, 6%+ remains too high and is unlikely to make the BoE endorse dovish rate expectations just yet.

EUR/GBP can retest the 0.8573 lows, but we expect it to find a bit more support this week as the Euro may benefit from some hawkish comments by ECB President Christine Lagarde in Davos. Our medium-term view on the pair remains bullish.