GBP: From the darling of September to the dump of October - ING

While the US media will be focusing on the hurricane effects in the data today, it was the ‘Harry Kane’ effect that provided a bit of joy in the UK media overnight, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“Still, it wasn’t enough to dislodge the top story – which continues to be questions over Theresa May’s leadership. While certainly not our base case, a scenario in which PM May steps down – and a Tory Party leadership contest in the near-term – is one that would weigh heavily on GBP. First and foremost, it would pose major doubts over a November BoE rate hike – which markets are all but pricing in at this stage (75% probability). A dovish BoE re-pricing on its own could see GBP/USD tumble below 1.30, while an increase in the short-term political risk premium priced into the pound could fuel the move lower towards 1.26-1.27 (EUR/GBP to 0.94). Downside GBP bets likely to pick up.”