GBP/USD: Further downside for cable next year as the UK economy appears to be challenging – HSBC


GBP/USD is likely to move sideways over the near term even if the Bank of England (BoE) delivers a rate hike on Thursday, December 16. Looking into 2022, economists at HSBC see further downside for the pound, as economic headwinds could weigh on the UK’s rates outlook.

Near-term neutral, but more downside risks ahead

“We expect GBP/USD to move sideways over the near term, despite the market’s confidence for a 15bp hike when the BoE meets on 16 December.”

“Looking into 2022, we believe interest rates are likely to have a bigger impact on G10 FX. With at least three more hikes in the price next year, the interest rate level of the GBP is still below that of other high-yielding G10 currencies, such as the NZD, and the USD.”

“The 2022 outlook for the UK economy appears to be challenging, amid an uneven economic recovery, Brexit frictions, and ongoing negotiations regarding the Northern Ireland protocol. These may somewhat explain the persistently low expectations of the UK’s ‘terminal’ interest rate, which makes the GBP vulnerable to a shift towards potentially faster tightening cycle in other G10 currencies, especially the USD.” 

“The GBP will probably also face a deteriorating current account deficit when the UK economy normalises.”

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD trades below 1.1450 despite disappointing US data

EUR/USD is having a difficult time gathering bullish momentum in the early American session and trades in the negative territory below 1.1450. The US Census Bureau reported on Friday that Retail Sales in December fell by 1.9%, missing the market expectation of a no-change by a wide margin.

EUR/USD News

GBP/USD drops below 1.3700 as dollar gains traction

GBP/USD stays under modest bearish pressure in the American session and trades below 1.3700. The US Dollar Index is clinging to modest daily recovery gains near 95.00 despite weaker-than-forecast macroeconomic data releases from the US.

GBP/USD News

Gold fluctuates in daily range above $1,820 after US data

Gold declined to $1,820 during the European trading hours but managed to edge higher toward $1,830 in the early American. The benchmark 10-year US Treasury bond yield retreated from 1.75% after the dismal US data, allowing XAU/USD to gain traction.

Gold News

Dogecoin price on track to hit new highs, rallying 16% with Tesla payments going live

Tesla announced that it accepts Dogecoin and cannot receive or detect any other cryptocurrency. Analysts have predicted an explosive rally in Dogecoin price, continuing the uptrend. 

Read more

Why did TSLA stock fall 7% on Thursday?

Tesla stock dumps on Thursday as tech takes a bath. TSLA shares fell nearly 7% to close at $1,031.56. Tesla support at the short-term pivot remains at $980.

Read more

Forex MAJORS

Cryptocurrencies

Signatures