06:11 AM EST, 02/13/2025 (MT Newswires) -- Despite the jump in short-dated United States rates on Wednesday, EUR/USD moved higher on the back of the Trump-Putin phone call and a possible end to the Russian-Ukraine war, said ING.

Shortly before those headlines hit, the euro was also rallying on comments from European Union officials that they were currently negotiating with their United States counterparts to try and avoid tariffs, wrote the bank in a note.

Progress on peace in Ukraine could be an important positive for European countries should it deliver lower energy prices and encourage broader investment on the back of something like a new Marshall Plan, stated ING.

Yet it's the threat of trade tariffs that hangs over Europe and it seems unlikely that businesses or consumers will be able to conclude anytime soon that the tariff threat has receded, pointed out the bank. No doubt speculators are currently paring back euro short positions.

Yet those positions aren't extreme and the sticky U.S. inflation story is keeping rate spreads very wide in the US dollar's favor, noted ING. That is why this EUR/USD correction will likely be a hard slog back to 1.0500/0530 with an outside risk of 1.0575.

Elsewhere, EUR/CHF can probably extend its gains, added the bank. A weaker Swiss franc (CHF) will likely be welcome for the Swiss central bank (SNB), where Swiss inflation should drop to 0.2% year over year in Q2 and the SNB has local exporters on its back over a strong Swiss franc.

ING's thoughts on Thursday's seemingly better-than-expected United Kingdom gross domestic product figures are:

"UK GDP was a bit better than feared in the fourth quarter but the outperformance was solely because of a massive increase in inventories. Remember these are volatile and don't tell us much/anything about the underlying economic fundamentals. Consumption was flat. Business investment fell sharply despite some really good numbers earlier in the year. Net trade was poor. So it's a lacklustre story which puts pressure on the Treasury to find savings. The OBR, which polices the fiscal rules, has forecast 0.4% in Q4 and therefore it will be revising down its highly optimistic 2% 2025 growth forecast."

EUR/GBP dropped 20 pips on Thursday's data, but a re-assessment of the data could see sterling (GBP) hand back its gains. ING is negative on sterling into Q2 and suspects that EUR/GBP will find support this month in the 0.8300/8350 area

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