GBP/USD could briefly tip back to the 1.2550 area on strong US data – ING

Economists at ING analyze GBP outlook.

Sterling must be enjoying support from implied short-dated yields over 5%

Sterling is consolidating and must be enjoying support from implied short-dated yields over 5%. We made the point last week that the FX hedging costs were now very painful for foreign investors in the UK Gilt market – a factor that could help Sterling.

There is little on the UK calendar today, so strong US data could briefly tip GBP/USD back to the 1.2550 area, where we expect it to find support.