GBP/USD to hold above the 1.2275/2350 band barring an upside surprise on US inflation data – ING

Economists at ING discuss EUR/GBP and GBP/USD outlooks following the release of UK Retail sales data.

The case builds for a June hike

“This morning has just seen UK April Retail Sales surprise on the upside. This will firm up the case for a 25 bps Bank of England hike on 22 June. And it will also delay any adjustment to the very hawkish expectations currently built into money markets, where the Bank Rate is priced up at 5.50% early next year.” 

“Today's data make the case for EUR/GBP to retest 0.8650 and for GBP/USD to hold above this 1.2275/2350 band (assuming US inflation data does not surprise on the upside).”

See – US Core PCE Preview: Forecasts from four major banks, inflation to stay elevated in April