The UK and EU have, at last, agreed on a deal that makes life easier for firms trading between Great Britain and Northern Ireland. However, the UK-EU deal is no game changer for Sterling, economists at ING report.

Welcome news, but not a game changer

“The global risk environment and a potential narrowing in UK-Eurozone interest rate differentials are likely to prove more important drivers of Sterling than the new UK-EU deal.” 

“Our preference is for EUR/GBP to find support in the 0.87/0.88 area and end the year closer to 0.89/0.90.”

“GBP/USD is a different story, where we continue to look for some Federal Reserve easing by the end of the year and a weaker Dollar. Our baseline view assumes that GBP/USD finds support under 1.20 in this first quarter and manages to trade in a 1.25-1.30 range by year-end.”