06:04 AM EDT, 05/08/2025 (MT Newswires) -- EUR/USD has drifted lower and is testing support at 1.1300 on Thursday, said ING.

The bank has been saying that the US dollar bounce has been lackluster, but positioning probably means that a move under 1.1250/1260 Thursday could do some damage.

Thursday's Bank of England policy meeting should be a market mover, stated ING. With a 25bps rate cut to 4.25% widely expected, probably the most important development Thursday will be what the BoE does with this sentence: "Based on the Committee's evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate." Those more dovish in the market are looking for "gradual and careful" to be dropped/amended to signal a sharper set of BoE rate cuts. ING isn't so sure the BoE is ready to drop that phrase just yet.

Given that the market is now pricing four 25bps rate cuts this year and ING expects three -- in May, August and November -- if BoE easing remains "gradual and careful," sterling could rally, wrote the bank in a note. For reference, the foreign exchange options market prices an 80 USD pip break-even range for GBP/USD over the next day.

For EUR/GBP, that break-even is 39 GBP pips. GBP/USD could get distorted by global risk sentiment on Thursday, but the bank would say a less dovish than expected BoE Thursday could drive EUR/GBP to the 0.8435/40 area.

The Czech market is closed Thursday for a public holiday. However, EUR/CZK looks fair to ING at current levels slightly below 24.900. The bank retains a slightly bullish view on the koruna (CZK) in the medium-term, given the outlook for inflation on still dovish market pricing.

However, after Wednesday's policy meeting at the Czech central bank (CNB) in which it cut rates by 25bps, it is clear that the downside for EUR/CZK is less than ING expected.

EUR/PLN, on the other hand, may receive some downside support if Thursday's press conference confirms a smaller cutting cycle than market pricing suggests, but conviction is low here given the Polish central bank's (NBP) unclear communication. For ING, PLN/CZK is likely to find a bottom for now and remain stuck in the 5.800-850 range.

EUR/RON broke 5.100 on Wednesday and it seems this line in the sand didn't last long, said ING. One-month forward implied yield reached 10% and the ROMGB sell-off continues, especially in front-end following implied yields, suggesting continued pressure on the Romanian currency (RON), leaving EUR/RON upside open for now.