GBP: A little underperformance coming through - ING

Some softer UK April GDP data this morning has seen sterling come under more pressure, ING's FX analyst Chris Turner notes.

EUR/GBP to trade towards 0.8550 and 0.8600

"Bit of a disappointing UK April GDP figure - down 0.3% on the month. Not a huge surprise. These figures have been hugely volatile recently. In part, that's a frontloading effect - manufacturing surged in Feb and has unwound since."

"But in general, there is mounting scepticism about the figures themselves, in particular given that for the past three years, the first half of the year has been stronger than the second, despite the data supposedly being seasonally adjusted. This suggests second quarter growth as a whole will come in around 0.1% or 0.2%, after 0.7% in the first quarter."

"This softer GDP data, following the softer wage data earlier this week, will suggest the Bank of England does have good reason to cut rates after all. EUR/GBP is close to 0.8500 now, and the building narrative of wider eurozone versus UK policy rate spreads (the ECB has nearly finished easing, the BoE could accelerate rate cuts) warns that EUR/GBP trades to 0.8550 and 0.8600 on a multi-month view."