The pound remains a very vulnerable currency according to analysts from Rabobank. They have a 3-6 month target of the GBP/USD pair at 1.04 and they cannot rule out a move to parity dependent on the decisions taken by the UK government.
“The ferocity of the market reaction which greeted the Chancellor’s mini-budget on September 23 has triggered a broad range of criticisms. Among them is the accusation that the Chancellor and his advisers naively failed to read market conditions. UK economic fundamentals have been souring for some time and GBP has been performing poorly for a while, not just against the mighty USD but against the beleaguered EUR too.”
“The signals from the budget imply that the UK government has put a low priority on fiscal prudence clearly pushed the market’s patience over the edge. While GBP/USD has scrambled back above the 1.10 level following intervention from the Bank of England, we continue to view the pound as a very vulnerable currency.”
“While the BoE’s fire-fighting policies can hold the market fairly steady for now, without some change in the government’s fiscal position, the pound is on borrowed time. We have a 3-6 month target of GBP/USD1.04 and cannot rule out a move to parity dependent on the direction of UK fiscal policies.”
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.