Brexit uncertainty is pound negative - ING

"The growing consensus within Theresa May's cabinet over a post Article 50 transitional arrangement with the EU is certainly good news for sterling. But along with the length of such a transition period, the details are key for GBP markets," notes James Knightley, Chief International Economist at ING.

Key quotes:

"A continuation of current arrangements over the agreed period - free movement of trade, capital, and labour - would have the greatest positive effect on GBP markets. Until we get further clarity, we think GBP will continue to trade with a negative bias in the short term."

"Signs of the UK economy slowing down are likely to dampen calls for a 2017 BoE rate hike, with markets pushing out expectations into next year. A recovery in dollar sentiment should see GBP/USD move back below 1.30, while a consolidation in the euro is likely to keep EUR/GBP below 0.90 for now."