Sterling is trading steadily, but politics should be supportive this month. We’ve already seen a new UK-Indian trade deal announced yesterday, but speculation is rising that a US-UK trade deal could be reached this week, ING’s FX analyst Chris Turner notes.
GBP/USD to trade back to the 1.3445 high
“It’s unclear whether London will be able to negotiate away the 10% baseline US tariffs, but it might be able to secure reductions in the 25% tariff rate on the car and steel sectors. Additionally, we’re still focusing on the 19 May UK-EU summit – the first since Brexit. Warming relations with the EU typically sees sterling rally.”
“We’ve also got the small matter of the Bank of England rate-setting meeting tomorrow. Our UK economist, James Smith, thinks the market has got ahead of itself in pricing too many rate cuts this year. We therefore have a bias that GBP/USD trades back to the 1.3445 high over the next couple of days.”
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