GBP: Macro back in focus this week – ING

Sterling rallied against the dollar but sold off against the euro last week, ING’s FX analyst Chris Turner notes.

EUR/GBP can have another run at the 0.8730 spike high

"As a reserve currency, sterling is participating in this de-rating of the dollar. But euro liquidity is higher than sterling, and there is probably much more repatriation of financial assets into the eurozone than into the UK, given the bloc's large trade surplus with the US."

"For this week, the sterling story could be driven more from the macro side. The focus tomorrow will be on the labour market and whether unemployment rose ahead of the introduction of higher employer taxes at the start of April. Wednesday will focus on inflation, where March services inflation is expected to drop to 4.8% year-on-year from 5.0%. Both pieces of data present downside risks to sterling."

"EUR/GBP could have another run at the 0.8730 spike high, although a dovish ECB on Thursday could then send EUR/GBP lower."