The Pound Sterling's (GBP) rally on yesterday's Bank of England communication looks fully justified. It’s hard to rule out GBP/USD pushing to the 1.35 area, and EUR/GBP could extend to 0.8340, ING’s FX strategist Chris Turner notes.

GBP seems on the rise

“UK short-dated yields rose relative to their eurozone counterparts as the BoE stuck to the new script of 'gradual' easing.”

“The BoE does genuinely seem to be questioning whether inflation will come down as much as elsewhere in the world and continues to present three scenarios. The BoE certainly does not seem to be in the Fed camp of signalling the 'all-clear' on inflation.”

“Thus, it's hard to rule out GBP/USD making a push to the 1.35 area, while EUR/GBP could extend to 0.8340. August UK retail sales have helped sterling today, but leading indicators for consumer confidence warn that consumers are starting to become fearful of the 30 October UK budget.”