GBP: Inflation adds to dovish BoE arguments – ING

The UK has just released CPI figures for May. While the headline reading slowed a tad less than expected to 3.4%, and core was in line with consensus at 3.5%, the closely-monitored services CPI came in a bit below expectations at 4.7% (expected 4.8%), ING's FX analyst Francesco Pesole notes.

A move to 0.860 in EUR/GBP may be on the cards

"The Bank of England’s recent hawkish turn has not been endorsed by data so far, as jobs, growth and now inflation figures have come in on the soft side. But it raises the risk of a slightly more dovish tone tomorrow; although not of a cut, which remains rather unlikely."

"For now, there aren’t many arguments against EUR/GBP strength. Geopolitical risks generally harm the pound more than the euro, and the data flow has been GBP-negative of late. Unless the BoE surprises with a more hawkish-than-expected message tomorrow, a move to 0.860 may well be on the cards."