ING Comments on Euro, Sterling, Czech Republic's Koruna Ahead of Central Bank Policy Decisions

06:18 AM EST, 02/05/2026 (MT Newswires) -- The EUR/USD this week has remained quite resilient -- especially given the recent spike in energy prices, said ING.

Thursday's challenge to EUR/USD will come from the European Central Bank press conference on the policy decision later in the day at 2:45 p.m. CET. Here, President Christine Lagarde will likely be quizzed over the ECB's reaction function to euro (EUR) strength, wrote the bank in a note.

It isn't just EUR/USD that has been strong. The ECB's nominal trade-weighted euro is at multi-decade highs and, more importantly, appreciating at a 7%-8% year-over-year rate.

Comments from Lagarde, such as that the ECB is 'monitoring exchange rates closely' or any mention of downside risks to inflation having increased, would hit, but not bury EUR/USD, stated ING. Sub 1.1770 on Thursday could open up the 1.1700/1720 area, but the bank doubts EUR/USD needs to go much lower than that near term.

ING pointed out that it may be reading a little too much into sterling (GBP) price action, but it did seem to sell off late Wednesday after British Prime Minister Keir Starmer faced a confrontation from his own Labour members of parliament in the House of Commons. Some would argue that Angela Rayner effectively kicked off her leadership bid by calling for greater scrutiny of the vetting process used for last year's appointment of Peter Mandelson as the British ambassador to the United States.

The prospect of a change in both prime minister and finance minister remains one of the key threats to sterling this year, where a replacement of the PM by Rayner would mark a clear shift to the left and add further doubts to the country's fiscal position. A by-election later this month and local elections in May mean that it will be a noisy few months for British politics, added ING.

This week's EUR/GBP dip could be the low point this quarter, noted the bank. For Thursday, ING will look out for the Bank of England statement at 1 p.m. CET. It looks a little early for the BoE to turn more dovish, though lower inflation in April means that ING is still calling for two cuts in the first half and weaker sterling.

Later Thursday, ING noted the Czech central bank (CNB) policy meeting and its expectations are for rates to remain unchanged at 3.50% for now. The main focus will be on the new forecast and the vote split. The inflation outlook should move significantly lower, but the question is how the CNB sees 2027.

The koruna (CZK) can be expected to see more downward pressure, according to the bank. EUR/CZK has moved into our targeted range of 24.350-400, but a low inflation number on Thursday would bring further upside to the range of 24.400-500.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.