Despite much discussion of stagflation and the UK returning to the candle-powered 1970s, GBP is actually performing quite well. Yet economists at ING are uncertain whether the Bank of England will act as early as the market expects. Therefore, GBP/USD may plunge to the 1.32 level in a couple of months.
Market is convinced the BoE moves early
“Our team feel that the BoE will hike later than market pricing – warning of some downside risk to GBP. Look out for key speeches from BoE hawks – and whether they seek to correct expectations.”
“Cable could briefly see 1.32 in next two months if the BoE indeed rejects calls for early tightening. And USD should outperform.”
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