ING Comments on The Euro, Sterling, Hungary's Forint

06:17 AM EST, 11/12/2025 (MT Newswires) -- EUR/USD has held onto its gains this week -- though that largely looks a function of the slightly softer US dollar (USD), said ING.

Tuesday's release of the German ZEW expectations index for November wasn't particularly encouraging, wrote the bank in a note. However, the aggregate ZEW figure for the eurozone as a whole ticked up, questioning whether Germany is increasingly becoming an outlier.

There is no eurozone data of note on Wednesday and the focus will be on European Central Bank speakers, stated ING. Here, Isabel Schnabel is speaking at 12:30 p.m. CET on the subject of: 'Europe Reimagined: The Path to Empowerment'. This sounds like a global euro (EUR) kind of speech with a call for particular European politicians to reduce fragmentation in the eurozone and pursue policy reforms.

The bank is "happy" that EUR/USD is trading closer to 1.16 than 1.15, but will probably require some softer U.S. data to justify a move well above 1.16 now.

EUR/GBP is trading back above 0.88 again after Tuesday's release of surprisingly soft September unemployment data in the United Kingdom, noted ING. Even though there are widespread doubts about the quality of the Labour Force Survey data -- this survey was briefly suspended in 2023 to reassess its quality -- sterling (GBP) has failed to reclaim its losses.

A further negative on Wednesday is news that Prime Minister Keir Starmer could face a leadership challenge after the budget later this month. Even though Starmer's approval ratings are very poor, his removal would create some doubt about the future of Finance Minister Rachel Reeves and add some risk premium to U.K. asset markets, added ING.

Sterling already has enough negative news from the tighter fiscal/looser monetary policy story to keep it weak. But political noise could push EUR/GBP to new highs for the year in the 0.8870/8900 area.

Tuesday's inflation in Hungary was slightly lower than expected, at 4.3% year over year versus 4.5% expected, confirming the downside risk of a stronger forint (HUF), according to the bank. Detailed figures show some stagnation, but it is still not a success story.

Core inflation, on the other hand, jumped from 3.9% to 4.2%, above the central bank's tolerance band, which will have to wait longer before returning to rate cuts.

In the base case scenario, ING expects rate cuts only in the second half of the year, but stronger currency and rate cuts by other central banks increase the risk of an earlier rate cut.

EUR/HUF bounced up from its current lows by 0.5% but the forint erased some of the losses on Tuesday, pointed out the bank. This confirms ING's view that, to a large extent, additional spending was expected by markets before the April elections.

At the same time, it suggests that this won't change the current long market view. As a consequence, foreign exchange appears to be a safer place than fixed income in the current environment, and will likely remain at current levels below 386 EUR/HUF.

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