Viraj Patel, Foreign Exchange Strategist at ING, suggest that all the cards are falling into place for GBP/USD to post a bullish move to 1.45 in 2Q18, which is where ING’s conviction continues to lie.

Key Quotes

“Looking at GBP's report card in March – Brexit politics, UK economic data and the Bank of England policy outlook have all turned into short-term positives for GBP  – helping it to retain its status as the ‘Comeback Kid’ in FX markets.”

“We're now back to good old-fashioned data watching in the near-term – given that this will dictate the pace of GBP's cyclical recovery. Under the status quo on the global economic backdrop (and trade wars is a big question mark here), it looks like a May Bank of England rate hike is in the bag. Were the UK economy to regain some of its ‘cyclical swagger’ – and the data outperform the broadly low expectations of investors – we would expect sentiment for two BoE rate hikes in 2018 to gain further traction. This will be the cue for GBP to post another bullish move higher.”