ING’s outlook for GBP: Medium-term bulls
- With BoE policy tightening and a resilient UK economy acting as a ‘put’ on the pound amid short-term Brexit risks, we continue to think there is more GBP upside over the coming months. We target GBP/USD at 1.45 in 2Q18.
- Equally, the currency should hold its ground against a strong euro and we look for EUR/GBP to trade within the broad 0.85-0.90 range, with a positive Brexit transition outcome suggesting greater risks of a move to the 0.86-0.87 range in the near-term.
- A hawkish Bank of England signal and nascent signs of wage inflation would be an added boost to GBP
- Only signs of complete gridlock between UK-EU officials would break the pound
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