Sterling is currently the big underperformer in the G10 space, dragged down by the introduction of new covid restrictions by the British government. Economists at ING expect the GBP/USD pair to fall below the 1.32 level.

Sterling hit by new restrictions 

“New guidance to work from home is largely expected to generate a fresh drag to an economy that can no longer count on pandemic emergency support tools, like the furlough scheme. This is likely contributing to tilt market sentiment further towards the ‘no-hike’ camp ahead of the 16 December Bank of England meeting.”

“PM Boris Johnson seems to be navigating the toughest period of his tenure and there is some risk that along with the economic implications of new restrictions in the UK, markets may be inclined to price in some degree of political instability as well.”

“Some recovery in the dollar may pressure cable below 1.3200 today, with sterling struggling to show any idiosyncratic strength for the time being.”