According to analysts from Rabobank, if the Bank of England (BoE) do not keep step with the hawkish guidance of the Federal Reserve (Fed) there is a risk that the pound could weaken further. They see the risk of dips in the GBP/USD pair to 1.18 on a three-month view. 

Key Quotes: 

“In recent sessions, the market has started to switch its focus to the risks of a deteriorating growth outlook in the US. Various economic indicators suggest that the economy may already have slowed. The UK slowdown is more advanced, with the cost of living crisis having been evident for months. Arguably the challenges facing policymakers in the UK are among the most complex in the developed world. UK CPI inflation has not yet peaked, and labour market strife indicates that higher inflation expectations may be already entrenched. However, UK consumer confidence has plunged, and, more recently, measures of business sentiment have also started to dive.”

“If expectations regarding BoE policy moves do not keep step with the hawkish guidance of the Federal Reserve, it can be argued there is a risk that GBP could weaken further. Yet, GBP is also proving sensitive to fears regarding growth. We see risk of dips to GBP/USD 1.18 on a 3 month view. We expect EUR/GBP to end the year at 0.88. 

“The BoE was out of the traps much earlier than either the Fed or the ECB in terms of policy tightening. However, this has failed to give the pound much of a lift, with GBP one of the poorer performing G10 currencies in the year to date. In our view, the inability of GBP to benefit substantially from the BoE’s early rate hiking cycle is due to the market’s focus on the poor growth outlook for the UK.”

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 Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD struggles to recover, holds above 1.0100

EUR/USD struggles to recover, holds above 1.0100

EUR/USD has staged a rebound after having declined toward 1.0100 in the American session on Thursday but failed to gather momentum. The US Dollar Index clings to strong daily gains above 107.00 after hawkish Fed commentary provided a boost to the dollar.

EUR/USD News

GBP/USD trades deep in negative territory near 1.2000

GBP/USD trades deep in negative territory near 1.2000

GBP/USD extended its daily slide and declined toward 1.2000 during the American trading hours on Thursday. With San Francisco Fed President Daly's hawkish comments helping the dollar outperform its rivals, the pair looks to close the second straight day in the red.

GBP/USD News

Gold falls below $1,760 as dollar rally continues

Gold falls below $1,760 as dollar rally continues

After rising above $1,770 amid falling US Treasury bond yields in the early American session, gold reversed its direction and dropped below $1,760. The unabated dollar strength on Thursday seems to be causing XAU/USD to continue to stretch lower.

Gold News

Why XTZ traders need to be glued to the screen for next 48 hours

Why XTZ traders need to be glued to the screen for next 48 hours

Tezos price will likely take a key turn lower today after the bullish print on Wednesday. XTZ price is at the mercy of global markets rolling over this morning. Either the technical support handles hold – or break under dollar pressure.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures