GBP/USD: Some emerging optimism for the pound – ING

Pound Sterling (GBP) is holding up quite well as UK Prime Minister Keir Starmer delivers some wins on trade and geopolitics, ING's FX analysts Francesco Pesole and Chris Turner note.

GBP rates to stay relatively high within the G10

"The big story this summer, however, could be warmer relations with Europe. The focal point here is the EU-UK summit on 19 May, where a defence pact should be signed and positive commentary should emerge on closer alignment. The desire here is to have the UK’s growth potential revised higher by the Office for Budget Responsibility, providing more fiscal headroom to the government."

"Elsewhere, we look for the Bank of England to cut rates twice more this year (to 3.75%), but GBP rates to stay relatively high within the G10. Its liquidity should be a boon for GBP during de-dollarisation."