GBP/USD set to plummet to the 1.2850 area – ING

GBP/USD touched its lowest level since November at 1.3071 on Friday before staging a recovery toward 1.31. As markets are too aggressive pricing Bank of England’s (BoE) rate hikes, economists at ING expect cable to plunge towards the 1.2850 mark.

EUR/GBP to drift a little lower

“Most of us think that the six BoE hikes priced by the market for this year are way too aggressive. But until the market is disabused of this notion – and this may not take place next week – GBP can probably hold onto its gains.”

“We favour EUR/GBP drifting a little lower, but remain more worried by GBP/USD. It has failed to recover above previous support levels at 1.3150/3180 and given our strong preference for dollars currently, 1.2850 remains a realistic target near-term.”