Pound Fights for Ground Against JPMorgan Range as ING Sees Rate Hike Pricing Unwind

The British Pound is facing a test of JPMorgan's preferred trading range as Sterling slips towards its September lows. The bank's tactical backing for the pound against the Euro is being tested, with the GBP/EUR exchange rate currently trading at 1.1621, down 0.09% from Wednesday.

JPMorgan's trading desk has retained its preference for selling EUR/GBP within the established range of 0.85-0.86, which translates to approximately 1.1628-1.1765 in GBP/EUR. However, Thursday's rate puts EUR/GBP near 0.8605, slightly above the ceiling JPMorgan identified.

ING, on the other hand, expects excessive UK rate-hike pricing to unwind, with its broader outlook pointing towards a GBP/EUR exchange rate of around 1.15 in the fourth quarter. This is roughly 1.1% below Thursday's price, and reflects ING's bearish GBP outlook as its baseline.

ING also doubts that the Bank of England will deliver all the subsequent tightening investors have anticipated, even if another oil price jump forces a November increase. The UK PMI release on Wednesday left the debate unresolved, with Pantheon interpreting the figures more hawkishly and suggesting that a November rate hike is still on track.