British Pound: Data-heavy week risks BoE repricing – ING

Chris Turner at ING notes that a busier United Kingdom (UK) data calendar, including jobs, wages and July Consumer Price Index (CPI), could challenge the 55bp of Bank of England (BoE) tightening still priced in. ING’s UK economist James Smith expects the data to be too soft to justify that path, which could allow EUR/GBP to move back toward 0.8575/0.8585, while ING maintains slightly negative views on Sterling.

Soft data could weigh on Sterling

"After a quiet few weeks, the UK data calendar picks up. Jobs and wage data are released tomorrow, and then the July CPI figures on Wednesday."

"Our UK economist, James Smith, thinks that the data will not be strong enough to support the 55bp of Bank of England tightening still priced into UK money market curves."

"If so, EUR/GBP should have an opportunity to work its way back to the 0.8575/85 area."

"Additionally, recall that the suspicion of faulty seasonal adjustments means that UK activity data typically comes in softer in the second half of the year than the first."

"We are still hanging on to slightly negative sterling views, even though M&A inflows may be providing temporary support."