GBP: Look to buy the dip as sharp move lower not due to Brexit-related risks - ING

GBP has fallen quite substantially for 3 consecutive days in a row now against both the USD and EUR – a feat that since the referendum has usually coincided with periods of heightened ‘hard’ Brexit risks, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“While there is certainly greater noise and uncertainty surrounding a transition deal – and tough talks between UK and EU officials – we believe Brexit dynamics have not been the driving force behind GBP’s latest corrective move lower. While a more hawkish tilt from the BoE tomorrow may not be (a) obvious and (b) result in material GBP upside until a Brexit transition deal looks more definitive, we see the dip in GBP/USD below 1.40 as a good buying opportunity amid a structurally weak $ backdrop. Still targeting 1.45 in 1Q18 as the UK economy regains some of its cyclical swagger.”