ING Comments on Euro, Sterling

06:01 AM EDT, 09/18/2025 (MT Newswires) -- EUR/USD is now trading back below 1.180 after touching 1.1920 immediately following the FOMC announcement on Wednesday, said ING.

Some positioning readjustments are probably contributing to the sharp EUR/USD drop during and after Federal Reserve Chair Jerome Powell's press conference on Wednesday, wrote the bank in a note.

ING's model indicates that the hawkish repricing at the front end of the US dollar (USD) curve, relative to the one (EUR) one, still places the short-term fair value at 1.185. So further drops to 1.170 would need to be justified by stronger United States data and, by extension, higher front-end USD rates, which isn't the bank's baseline considering the clear negative momentum for U.S. jobs news.

ING expects a return to 1.185 in EUR/USD over the coming days and continues to target 1.20 in Q4.

The Bank of England will likely keep rates on hold later Thursday, following a hawkish cut in August, according to ING. Markets are also pricing in no chance of a cut on Thursday, but the November decision still appears to be hanging in the balance. The focus will be on any new forward guidance, the vote split and the quantitative tightening (QT) announcement.

Regarding forward guidance, the bank doesn't predict anything new. The BoE has pointed to cautious and gradual easing for some time, and recent data hasn't pointed to a shift to directional guidance. Markets should continue to infer the BoE Monetary Policy Committee mood from the vote split.

ING's call is 6-3, with Swati Dhingra, Alan Taylor and Dave Ramsden voting for a cut. That might be read as slightly dovish, but would cause a major repricing, which remains very much tied to incoming data.

The QT announcement has the largest market impact potential. ING estimates a slowdown in the annual gilt reduction target to 75 billion pounds, which is in line with recent consensus estimates.

Expectations are likely that there will be some shift to younger maturities to lift pressure off the struggling long-end of the gilt curve, added the bank. Any negative surprises on QT on Thursday could trigger gilt sell-offs that have proven to spill over significantly onto sterling (GBP).

ING's baseline remains for a gently supported EUR/GBP into November's BoE and budget events.

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