UK energy package will be announced today. Depending on how it is financed, private investors will be asked to increase exposure to gilts by a record amount. And that could leave the pound even more vulnerable, economists at ING report.

How fiscal package is funded will drive sterling

“The highlight of today's sterling session will be the announcement of the new UK government's energy package and in particular how it is funded. The announcement comes around lunchtime. The greater amount of public funding, the greater the Gilt supply and the greater the pressure on sovereign risk and the pound.”

“Our base case would assume that GBP/USD struggles to break 1.16 and EUR/GBP tests the June high at 0.8720.”