On Friday, ING, a leading financial institution, signaled that the softer-than-expected UK retail sales figures for March are unlikely to influence the Bank of England's monetary policy. According to ING, the retail sales report was eclipsed by more significant news from Iran, and the Bank of England's position should remain unchanged as a result.
The March retail sales data was released amid a week of economic updates that, according to ING, have reduced the likelihood of the Bank of England lowering interest rates before August. ING's economists anticipate the first rate cut to occur in that month, aligning with the broader economic projections.
ING's analysis also touched on currency implications, suggesting that the Euro to British Pound (EUR/GBP) exchange rate may not find substantial support in the short term. The firm maintains a moderately bullish medium-term outlook on the EUR/GBP pair.
Still, they caution that the British Pound could be more susceptible to geopolitical risks compared to the Euro. This vulnerability is attributed to the Pound's greater sensitivity to global risk sentiment and recent data indicating that the Pound has the largest net-long positioning among G10 currencies.
The financial institution's commentary comes at a time when markets are attentive to the Bank of England's next moves, especially in the context of global economic uncertainty and geopolitical tensions. Market participants often look to such insights to gauge potential currency fluctuations and the central bank's monetary policy trajectory.
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