ING delves into the current dynamics of the GBP and offers predictions on its trajectory for the upcoming week based on various financial indicators and market events.

Key Points:

1. Sterling's Strong Position: The Bank of England's trade-weighted sterling index is hovering near its yearly peak. This buoyancy is significantly influenced by the high short-term interest rates. The 3m GBP implied yields, standing at 5.40%, make it notably costly to FX hedge positions in UK bond markets.

2. Anticipated Strength Duration: ING speculates that this vigor in the GBP might persist till the subsequent releases concerning UK wages and the Consumer Price Index (CPI), scheduled for September 12th and 20th. The GBP may fare better against the euro in contrast to the USD, given the prevailing challenges in the external investment domain.

3. This Week's Forecast: The UK's economic calendar is relatively subdued until the PMI data release on Wednesday. For this particular week, ING predicts:

   • EUR/GBP: The pair is expected to remain in a bracket between 0.8500 and 0.8550.
   • GBP/USD: It's predicted to stay confined within the previous week's tight range, which spans from 1.2615 to 1.2785.

Conclusion: While the GBP continues to showcase resilience, primarily due to high short-term interest rates, its trajectory for the coming week, as per ING, will be influenced by upcoming economic releases and current market dynamics. The currency is anticipated to maintain its strength, particularly against the euro, while the forthcoming PMI data release could also play a pivotal role.