GBP/USD set to retest 1.08 prior to year-end – CIBC
|GBP/USD traded at an all-time low of 1.0350. The pair has staged a substantial recovery but economists at CIBC Capital markets expect cable to ease back lower towards 1.08 by the end of the year.
Lack of fiscal credibility and a more aggressive BOE tightening bias underlines ongoing GBP headwinds
“The lack of fiscal credibility, allied to a more aggressive Bank of England tightening bias into 2023, dragging on growth, (the UK terminal rate is now set to be above 4%) underlines ongoing GBP headwinds.”
“As the BoE has been forced to come in to stabilize a material dislocation in the fixed income space, we would expect that the currency will continue to be the broad pressure release valve amidst ongoing fiscal and political pressures. Hence, the recent GBP rally is likely to soon stall, leaving open the risk of a re-test of 1.08 prior to year-end.”
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