GBP/USD to drop into the 1.2800/1.2850 area in the coming days – ING

Economists at ING analyze GBP outlook.

GBP volatility should remain elevated

The question of whether the Bank of England will hike by 25 bps or 50 bps remains open. We are in the 25 bps camp while markets are pricing in 35 bps, close to a 50/50 split. 

Volatility in the Pound should remain elevated. 

We continue to favour a weaker GBP/USD into the 1.2800/1.2850 area in the coming days but are less convinced of EUR/GBP upside potential into the FOMC and ECB risk events next week.