05:58 AM EDT, 09/05/2025 (MT Newswires) -- Bloomberg's latest poll of European Central Bank forecasters shows expectations have turned markedly more hawkish, said ING.

Consensus has cemented around the cutting cycle ending at over 2%, and the share of respondents agreeing with the banks 1.75% terminal rate call has shrunk.

"Interestingly," expectations for rate hikes in the second half of next year have risen, stated ING. Markets have continued to price out rate cuts, with only 8bps left in the December contract.

So far, data has vindicated this view, but the bank thinks the debate on another cut may be more heated than expected, which means ECB meetings and subsequent off-meeting communication carry some downside risks for the euro.

However, for EUR/USD, it's still almost all about the Federal Reserve and United States data, and ING expects a return above 1.170 based on the US dollar (USD) view.

French politics -- alongside any developments in the Russia-Ukraine war -- remains the other important theme for the euro (EUR) in the coming days, wrote the bank in a note. Expectations are for the French parliament to vote down Prime Minister Francois Bayrou on Monday, with a realistic scenario afterwards for President Emmanuel Macron choosing a new centrist or center-right prime minister to deliver a watered-down fiscal consolidation package.

Political uncertainty is set to remain elevated through this process, but the bank isn't sure that's enough to trigger any uncontrolled OAT swings and, by extension, significant pressure on the euro as the no-confidence outcome appears largely priced in.

Attention should still be focused on Poland's central bank (NBP) and Thursday's conclusions from the press conference, according to ING. Despite a hawkish start, Governor Adam Glapinski ultimately admitted that the NBP's next decision will essentially depend on the administrative decision on whether energy prices will be frozen from October or not.

Given that the bank estimates the government to pass the necessary legislation in September, ING sees the door open for another rate cut in October.

Possible interviews on Friday with other MPC members may offer insights into the reaction function, which could help ING read the reaction function here. Although the priced terminal rate of 3.75% seems low enough, the upward movement in rates in recent days suggests that a dovish press conference could bring receivers back into play and frontload rate cuts.

As a consequence, the bank no longer sees room for EUR/PLN to go below 4.250 after Thursday's press conference. On the contrary, the interest rate differential now suggests a range of 4.260-270.