The pound suffered on Friday the worst decline since at least March 2020, with GBP/USD losing more than 300 pips. Analysts at MUFG Bank, remain bearish on the pound and point out the loss of confidence in GBP is becoming more concerning.
Key Quotes:
“We now expect the BoE to hike by 75bps on 3rd November; a 100bp move can’t be ruled out. The OIS market is priced for a 4.00% Bank Rate by year-end. We don’t think we quite get there but it is clear where short-term rates are heading. The primary risk here relates to the timing of this huge fiscal stimulus on top of the lack of accountability.”
“We remain bearish GBP as it approaches levels closer to the all-time low of 1.0520 in 1985. There is certainly no ‘happy-feel’ to this fiscal give-away and appears if anything to have increased the level of uncertainties that were already very elevated.”
“At the same time the BoE’s decision to raise rates by “only” 50bps this week instead of 75bps like the ECB and Fed could be adding to concerns that the BoE is falling behind the curve in fighting inflation. We expect these policy concerns over the appropriateness of both fiscal and monetary policy to remain in place in the near-term weighing heavily on the GBP. Furthermore, the renewed sell-off in global equity markets and tightening of global financial conditions make it more challenging to finance the UK’s elevated current account deficit reinforcing downward pressure on the GBP.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Information contained on this page is provided by an independent third-party content provider. This website makes no warranties or representations in connection therewith. If you are affiliated with this page and would like it removed please contact editor @saltlakecityutah.business
