A number of candidates have thrown their hats into the ring as the process to elect the new Conservative Party leader (and future Prime Minister) kicks off. However, the pound is set to shrug off politics as recession fears and potential BoE’s dovish repricing looks more relevant, economists at ING report.

EUR/GBP may remain in a 0.8450-0.8500 range for now

“We expect sterling to be only modestly influenced by the Tory leadership contest, and downside risks stemming from the challenging external environment, a grim domestic outlook and a potential dovish repricing of the Bank of England’s rate expectations look set to remain much more relevant.”

“Since EUR remains in a fragile state too, EUR/GBP may remain in a 0.8450-0.8500 range for now, while GBP/USD could extend losses to the 1.1700-1.1800 area on the back of dollar strength.”