Pound Faces Data-Driven Volatility Ahead

The British Pound is facing a critical week ahead of key economic data releases in the UK. According to ING, a busier-than-usual calendar will bring jobs and wage data tomorrow, followed by the July Consumer Price Index (CPI) on Wednesday.

ING's economist James Smith expects these numbers to be softer than expected, which could challenge the 55bp of Bank of England tightening still priced in. This could allow EUR/GBP to move back toward 0.8575/0.8585.

Smith also notes that UK activity data typically comes in softer in the second half of the year due to suspected faulty seasonal adjustments.

ING maintains slightly negative views on Sterling, despite temporary support from M&A inflows.