GBP/USD is trading at its lowest level in two years below 1.22. Economists at ING expect cable to extend its losses to tward the 1.20 level.

Politics hit the pound

“Reports suggest that the UK government is giving the EU until early next week to soften Northern Ireland's trading arrangements, otherwise the UK will introduce legislation to do so. A UK-EU trade war will be the headline and will not be welcome for the growth-sensitive sterling.”

“Cable remains very heavy and can continue edging towards 1.20.”

“EUR/GBP could edge higher to 0.8650, but as we have seen with EUR/GBP over the last two years, chasing short-term moves remains dangerous and it could easily reverse.”