GBP/USD briefly traded below 1.20 at the end of Tuesday’s session, having fallen to the March 2020 lows. Economists at ING expect the pair to extend its decline toward the 1.17/18 region.

Negatives piling up

“It does appear to us that a lot of negatives regarding a slowdown in the UK economy are in the price, but there is still some downside risk related to a potential re-pricing in the Bank of England rate expectations, which continue to be overly hawkish (more than seven rate hikes expected by year-end).”

“For today, EUR/GBP should be a function of ECB-related news, and we could see some support above 0.8700.”

Cable will largely be a function of the FOMC meeting and some support around 1.20 is possible today, even though risks remain skewed to the 1.17-1.18 area in the short-term, with more Brexit and Scottish referendum news potentially adding fuel to the fire.”