There are no real UK-specific drivers that would justify a sustained GBP outperformance – ING

GBP/USD has climbed above 1.2200 while EUR/GBP has dropped below 0.87. Economists at ING analyze Sterling’s outlook.

Chance of a further correction in EUR/GBP

GBP/USD has rallied in line with the Dollar correction but there are no real UK-specific drivers that would justify a sustained GBP outperformance at this stage. 

EUR/GBP has eased back from the 0.8700 level, in line with our expectations, after the turmoil in Italian bonds and given the big bulk of dovish Bank of England repricing had already happened. There is probably still additional room for a correction in EUR/GBP should Italian spreads keep widening.