The pound is trying to find some support around the 1.22 level after what has been a near-freefall from the upper half of the 1.20-1.30 range. Economists at ING note that the cable is at risk of falling towards 1.20 next week.

EUR/GBP may remain close to the 0.85 mark

“The way ahead looks likely to remain very uneven for the pound considering that markets still have a good deal of monetary tightening to price out from the GBP swap curve (which continues to imply a policy rate at 2.00% by year-end).” 

“Incidentally, with Brexit-related risks back to the fore as the UK appears close to unilaterally scrapping parts of the Northern Ireland agreement, the downside risks for GBP remain quite significant and a move to 1.2000 next week may be on the cards.”

“EUR/GBP may remain close to the 0.8500 mark (as the euro is facing weak momentum of its own), although we see greater potential for a return to 0.8600 rather than a drop to 0.8400 in the near term.”