GBP rally has limited legs amid political uncertainties - ING
|Viraj Patel, Foreign Exchange Strategist at ING, suggests that they would expect Brexit to once again recapture the narrative for GBP price action in October ahead of key political events, and this could well limit the extent to which sterling moves materially higher in the near-term.
Key Quotes
“Nonetheless, the sustained move in EUR/GBP below 0.90 following the September BoE meeting has almost certainly shelved any ‘parity’ fears for now. We look for the pair to consolidate in the 0.8800-0.9000 region over the coming weeks, with downside risks to 0.87 should UK political risks fade, and bullish EUR sentiment recede further.”
“A move higher in GBP/USD may be harder to come by were the dollar to find support from higher US rates; our view for a slightly more dovish Fed next week means GBP/USD could extend its near-term move higher towards 1.3500.”
“Overall, we remain content with our forecasts for EUR/GBP at 0.90 and GBP/USD at 1.33 by end-2017, but see risks of pencilling in additional GBP strength were we to see greater steps towards a Brexit transitional deal over the coming months.”
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