In the view of analysts at ING, the British pound remains vulnerable on recession fears. Beyond some substantial fiscal stimulus, GBP’s best hope is that the Bank of England (BoE) delivers on most of the aggressive tightening currently priced into markets.

 Growth sensitive pound to struggle

“GBP/USD remains vulnerable on the back of continuing dollar strength and the UK economy trapped by slowing growth and a hawkish BoE.” 

“A tricky environment for risk assets in 2H22 – slowing growth, tighter monetary conditions – suggests the growth sensitive pound will struggle.”

“The only thing helping it should be the BoE remaining hawkish all year – lifting rates 50 bp to 2.25% in September – and at least making sterling an expensive sell.”