GBP/USD: The 1.2850 mark beckons on the downside – ING

The Bank of England (BoE) is expected to raise rates at its next meeting in May. Investors are divided between a 25bp or 50bp hike. Furthermore, Brexit issues loom again. Subsequently, the GBP/USD could fall to the 1.2850 area, economists at ING report.

25bp or 50bp at the 5 May BoE meeting?

“The market is now pricing a 38bp adjustment at the 5 May meeting and it may be hard to put the 50bp genie back in the bottle.”

“Sterling faces some political risks again where the Financial Times today reports that the UK is (yet again) threatening to rip up parts of the Northern Ireland protocol, agreed as part of the Brexit deal. Markets have come to ignore this, although it could add to some downside risks to cable – where we think 1.2850 beckons.”