06:06 AM EST, 12/05/2024 (MT Newswires) -- While some may see the falling of the French government as a positive in that fiscal restraint is delayed, ING said weak business investment means France will only grow 0.6% next year.

Add in Germany contracting at 0.2% in 2025 and eurozone gross domestic product for the year comes in at just 0.7% -- with the meagre growth thanks to southern Europe.

ING sees the European Central Bank cutting rates to 1.75% next year. This should keep short-dated EUR:USD rate spreads near 200bps in favor of the US dollar all year and bring EUR/USD close to parity.

Elsewhere, GBP:USD briefly sold off and then recovered after Bank of England Governor Andrew Bailey seemed to confirm that the BoE was looking at four rate cuts over the next year, with the market only pricing three, stated ING. However, those remarks did look a bit 'technical' -- in that they merely confirmed what the BoE had been using in its models for its forecasts.

The bank will be watching closely a speech by Megan Greene, a BoE hawk, later on Thursday.

As expected, Poland's central bank (NBP) left rates unchanged at 5.75% on Wednesday and the accompanying statement didn't bring much fresh news. In detail, however, it probably shows a slightly less dovish tone than in November, wrote the bank in a note.

Given market pricing, Thursday's NBP press conference may be neutral or slightly hawkish in ING's view compared with market expectations. After Wednesday's statement, rates sold off by roughly 5bps-7bps, supporting a stronger zloty (PLN).

EUR/PLN quickly reached Wednesday's 4.280 level and the bank believes the press conference may add further support to PLN, on the other hand, current valuations seem stretched at current levels.