GBP/USD: The market may be underpricing the chances of parity – ING

GBP/USD has dived below the 1.10 level. Economists at ING believe that further losses toward parity could be on the cards.

Investors will continue to shun sterling

“Unless something can be done to address these fiscal concerns, or the economy shows some surprisingly strong growth data, it looks like investors will continue to shun sterling.”

“For reference, the FX options now price the chances of GBP/USD hitting 1.00 by year-end at 17%. That is up from 6% in late June.”

“Given our bias for the dollar rally going into over-drive as well, we think the market may be underpricing the chances of parity.” 

See – GBP/USD: Calls for parity may begin to emerge – TDS