GBP: Staying offered – ING

EUR/GBP is staying bid near the recent high of 0.8450/60, ING's FX analyst Chris Turner notes.

Above 0.8450/60, EUR/GBP can see 0.8500

"While we (and the UK sovereign credit default swap market) do not think this is a Liz Truss-style moment for UK sovereign risk, we do think the solution to the current challenges is sterling negative. To resolve the risk of breaching the fiscal rule, either the government needs to cut spending, the Bank of England to cut rates (lowering Gilt yields) – or both."

"There is not a lot on the UK data calendar this week apart from the November jobs data tomorrow. We also wonder whether Wednesday's release of the December budget figures will draw greater attention than normal."

"But overall, we see little reason for sterling to recover. Above 0.8450/60, EUR/GBP can see 0.8500. GBP/JPY is very much in focus as well given the prospect of the Bank of Japan hiking 25bp this Friday. 185 looks very possible here."