2022 has been a difficult year for the UK. Economists at ANZ Bank expect the GBP to remain under pressure in 2023 relative to other G10 currencies.
Structural challenges
“In view of weak fundamentals in the UK, we expect the GBP to remain under pressure in 2023 relative to other G10 currencies.”
“The fundamental backdrop for the UK is filled with uncertainty. Over the short term, households will have to deal with elevated inflation, higher taxes and the increased costs of servicing debt. This will dent consumption and dampen the already subdued growth outlook. All of these are GBP negative.”
“The fiscal and political risk premium in the GBP has decreased considerably since Cable touched a low of 1.0350 in September. The GBP is unlikely to test those lows again. Considering the new government and the fiscal plan announcement, our view is that it has established a new floor at 1.15 against the USD.”
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.
Recommended content
Editors’ Picks
EUR/USD rebounds toward 1.0750 as risk flows return, German ZEW eyed
EUR/USD is rebounding toward 1.0750 in early Europe. The pair is gaining upside traction amid an upbeat mood, which is capping the US Dollar recovery. Markets cheer the latest global banking sector developments ahead of Germany's ZEW survey.
GBP/USD remains pressured around 1.2250 despite upbeat mood
GBP/USD is on a corrective move lower while testing 1.2250 in the early European morning. A pause in the US Dollar decline is weighing on the pair, despite a better market mood. Investors stay cautious amid the global banking woes and ahead of the Fed decision.
Pullback from yearly highs continues as Credit Suisse rescue soothes markets
Gold price pulls back from its yearly high as global banking jitters pass (for now) and US Treasury yields find a floor, supporting a stronger US Dollar. The precious metal trades at $1,972 at the time of writing as it continues to consolidate within a technical uptrend.
Coinbase argues core staking services are not securities in its letter to SEC
Coinbase submitted a comment letter to the US financial regulator asking for clarification on core staking services. The exchange explained that staking services fail every single prong of the Howey test, therefore, cannot be treated as securities.
FX thoughts for the week
Do central banks face a conflict between their inflation mandate and financial stability? The markets are still grappling with this question and confidence in the financial sector has not fully recovered. For now, central banks are responding with a conditional no.