GBP/USD: Relative US-UK data to retain downside bias - ING

Viraj Patel, Research Analyst at ING suggests that they continue to see downside risks in GBP/USD towards 1.27-1.28.

Key Quotes

“Robust signs of underlying inflationary pressures in the US may be a wake-up call to bond markets that currently see inflation as being more than just on a summer holiday. In theory, the return of a steepening bias in the US yield curve should be positive for the USD. This is particularly relevant for GBP/USD, where short-term rate spreads are a key driving force.”

“We continue to see downside risks in GBP/USD towards 1.27-1.28 on the back of a US data-driven USD recovery and UK data weighing on GBP. However, recent geopolitical developments and rising US-North Korea tensions may see the current dollar nervousness remain in place, limiting any material downside below 1.30 in the near-term.”