On the assumption that UK economic data will show increased signs of stress in Q3, and given also our view that the USD will remain well supported in the coming months, we expect that Cable will struggle to hold its recent gains.

The risk for GBP is that further progressive rate hikes from the Bank significantly undermine the recently improved growth outlook.

We see scope for Cable to edge lower to GBP/USD 1.22 on a three-month view.