GBP/USD: Cautious Fed talk amid weak US data won't spur $ optimism - ING

"After a dismal August, GBP looks to be entering a consolidative phase ahead of the upcoming BoE policy meeting (September 14)," notes Viraj Patel, Foreign Exchange Strategist at ING.

Key quotes:

"We believe that both a softer UK economic outlook and domestic political risks are adequately priced into the currency now, and only an escalation in either would warrant further idiosyncratic GBP weakness. Services PMI (Tue), house price data (Wed) and industrial production (Fri) are the key UK data releases to note this week, though we note the more likely catalysts to break the current spell of GBP weakness are next week's key CPI and retail sales figures."

"The dollar looks to be down on its luck too, which in effect explains the stability in GBP/USD. The number of data points to save a Fed rate hike in December is decreasing by the week and unless some Fed speakers manage to convince markets otherwise, we doubt GBP/USD will find any major directional impetus this week. More noticeably, the dollar has failed to derive any benefit from the return of fiscal stimulus chatter as part of the Trump policy agenda, no doubt because the chances of Congress approving unfunded 'tax cuts' - as opposed to comprehensive 'tax reform' - look virtually zero."