ING FX Strategy Research discusses GBP outlook in light of the recent media reports which have suggested that the EU and the British officials have agreed on the settlement of the so-called 'divorce bill'.
"While this stage of the negotiations has little economic significance for sterling, the news of a breakthrough in talks has profound political significance for a currency that is pricing in a lot of bad news.
We do foresee a ‘gentlemen’s agreement’ over a transition deal as being a bigger positive catalyst for GBP down the road, but for now, we hold the view that small steps forward are helpful for UK asset prices.
We now have greater conviction over our year-end target of 1.36 for GBP/USD," ING argues.
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