Ongoing GBP challenges into year-end – CIBC

FXStreet Insights Team FXStreet

The BoE is likely done raising rates – and the combination of weak activity and a softening labour market will weigh on the GBP in the near-term, economists at CIBC Capital Markets report.

The BoE is done but will leave the door ajar

Having held rates in September, it appears that the BoE is mindful of the lagged impact of the 515 bps of accumulated tightening thus far in the cycle. Indeed, we now assume that the BoE has likely concluded its policy tightening.

The UK rate spectrum remains a function of inflation expectations and growth assumptions.

The paring in terminal rate expectations, allied to ongoing data headwinds point towards ongoing GBP challenges into year-end.

GBP/USD – Q4 2023: 1.19 | Q1 2024: 1.21

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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