Foreign exchange analysts see EUR/GBP rising towards 0.870 as BoE hike expectations unwind, with markets already starting to pare back 2026 tightening bets.
The Euro to Pound (EUR/GBP) exchange rate climbed to around 0.8573 on Thursday, building on Wednesday’s 0.2% advance and pushing back towards the upper end of its August range.
That is already some distance above the 0.8550-60 area which ING identified after the Euro‘s initial Treasury-buyback premium faded.
The more important part of ING’s argument is rates.
The bank said “market pricing for 32bp of Bank of England tightening by year-end remains too hawkish”, while its own economists expect no increase in Bank Rate during 2026.
That gap has now started to close.
LSEG pricing on Thursday showed just 24.3bp of BoE tightening by December, with a full 25bp increase no longer priced until February 2027.
Only around 4bp is priced for September, equivalent to roughly a 15% probability of an immediate hike, while a Reuters economist poll also points to the BoE remaining on hold through 2026.
In other words, part of the repricing ING expected is happening already.
The chart has also changed character rather quietly.
EUR/GBP bottomed near 0.8532 during August and has moved back above its rising 20-day average, although the month’s 0.8585 high remains the first hurdle before a larger move can develop.
Why ING Still Prefers EUR/GBP Higher
ING expects the cross to return to following short-term UK-Eurozone rate differentials more closely as the disruption surrounding US bond-market intervention settles down.
A relatively empty UK data calendar may keep volatility contained in the immediate term, but the direction of BoE repricing matters more for the multi-month view.
ING still sees EUR/GBP moving towards 0.870 as Sterling’s front-end rate support is pared back.
The call sits neatly alongside the 0.87 three-month EUR/GBP forecast from Rabobank we covered this week, although the two banks get there through slightly different arguments.
Rabobank places greater weight on autumn fiscal risks, while ING’s cleaner catalyst is a market that is still giving the BoE too much credit for future tightening.
At 0.8573, a move to 0.870 would amount to roughly another 1.5% rise in EUR/GBP.
With BoE pricing already moving in ING’s direction, 0.8585 is now the near-term test and 0.870 the more consequential one.
Our currency coverage draws on live market data, official economic releases and published bank research.
