ING: Limited room for further recovery in GBP

Investor positioning has played a key role in sterling’s recent rally, but further gains are likely to be limited, ING analyst Chris Turner said in a note.

GBP/USD could briefly rise to 1.22-1.23 further, but this would be the best level before year-end. Likewise, EUR/GBP is well supported in the 0.8550-0.8600 area.

We believe the pound should remain vulnerable as central banks raise interest rates and the economy gradually heads towards recession, with markets facing a difficult risk environment into the end of the year and into early 2023.