GBP/USD: A return above 1.20 is not likely at this stage – ING

Analysts at ING are going to keep an eye on a busy UK data calendar. Nonetheless, global sentiment is likely to play a bigger role in driving GBP/USD which is set to remain below the 1.20 level.

A very busy data calendar this week

“Another round of voting in the Tory leadership contest will cut another candidate from the list and tell us whether Rishi Sunak has managed to hold on to his position as front-runner. Markets will keep an eye on this, but for now, the implications for sterling are likely to remain quite contained.”

“Headline CPI is expected to have accelerated to 9.3% year-on-year in June, while the core rate may have inched lower. Later this week, retail sales and PMIs should also have some market impact.”

“We expect this week’s data flow to help markets fully price in a 50 bps rate hike by the Bank of England (currently, 42 bps is priced in), which could offer some moderate support to sterling.”

“Still, global risk sentiment is expected to play a bigger role in driving GBP/USD for now, and we suspect that a return above 1.20 is not likely at this stage.”

“EUR/GBP may keep oscillating around the 0.85 gravity line this week.”