More turmoil in the UK bond market has seen the Bank of England (BoE) step in with another emergency measure, this time to support battered inflation-linked bonds. However, economists at ING expect the GBP/USD pair to slip under the 1.10 mark. 

GBP/USD looks too strong at 1.10 considering the fragility of the bond market

“The BoE delivered another pre-market attempt to calm investors, by announcing it will widen the scope of daily gilt purchase operations, including inflation-linked bonds.”

“We continue to see downside risks for the pound, as levels around 1.10 do not mirror the fragility of the UK bond market.”

“We expect a decisive break below the 1.10 level today or in the coming days, and currently target the 1.00-1.05 area for the pair into year-end.”

 

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