Market news
16.05.2022, 07:09

GBP/USD: A slide towards the 1.20 level remains on the cards – ING

It will be worth keeping an eye on data this week in the UK. However, Bank of England’s (BoE) rate hike expectations are likely to remain unchanged. In the view of economists at ING, cable remains at risk of falling towards 1.20.

Data releases in focus this week

“Tomorrow, jobs figures should keep pointing to a tight labour market and potentially some marginal acceleration in wage growth. On Wednesday, the April inflation report should show a jump in the headline rate above the 9.0% mark (so a 2.5%+ month-on-month reading) while the core rate should rise above 6.0%. Still, we suspect the monetary policy implications of these readings may be quite contained given that the Bank of England’s latest forecasts already embed double-digit inflation later this year.”

“The battered pound is largely hanging onto some recovery in risk appetite to extend Friday’s marginal rebound. However, markets will also keep a close eye on Brexit-related developments, which may end up generating more downside pressure on the currency.”

“The risks of a move to 1.2000 in GBP/USD in the near-term remain very material.”

 

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