The Pound survived the Autumn Statement, but downside risks persist in GBPUSD, economists at ING report.

EURGBP could rise to 0.89 by year-end

“The Pound survived the much-feared Autumn Statement by Chancellor Jeremy Hunt. Ultimately, the impact on next year's growth should not prove huge, especially compared to expectations. The tax hike will only affect high incomes and energy companies, and the National Insurance cut by the previous government has not been reversed.”

“We think it is too early to call for a prolonged stabilisation in the gilt market, and our debt team notes that there is still a lot of extra supply for private investors to absorb.”

“We continue to see downside risks for GBPUSD as the Dollar may start to recover into year-end, and target sub-1.15 levels in the near term. However, we forecast some outperformance in EURGBP (primarily due to EUR weakness), which could rise to 0.89 by year-end.”