GBP/USD has been sluggish near 1.20. Economists at ING expect the pair to remain under pressure for now before recovering to 1.23/1.25 by the summer.

BoE tightening could be coming to a close

“Unlike the Federal Reserve (+75 bps) and European Central Bank (+100 bps), we think the Bank of England may only have 25 bps more of tightening left to do – taking Bank Rate to 4.25%. This is partly because more equivocal speeches from BoE officials and key survey data suggest tightness in the UK labour market is abating.”

“Our game plan sees GBP/USD staying soft through March on the strong Dollar (1.1850 the potential and outside risk to 1.1650), before broader Dollar weakness sees cable return to 1.23/1.25 this summer.”

“A difficult equity environment could also challenge Sterling.”