There’s a reason to be skeptical about further Pound Sterling (GBP) strength.
There’s a reason to be skeptical about further Pound Sterling strength. Even though, there is much to be said for a stronger pound at the moment – stubborn inflation, a recovering real economy and the hopes associated with the new Labour government. Much of the positive case is based on hope – basically, GBP is in a kind of honeymoon phase. But these hopes have to be realised first, Commerzbank’s FX analyst Michael Pfister notes.
Although the parties are blaming each other for the situation, filling this hole is likely to require difficult decisions. The autumn budget is likely to be the main focus.” “Also, Bank of England's meeting on Thursday is likely to be of particular importance for GBP. Our economists believe that the BoE is likely to initiate a turnaround on interest rates, given that the headline rate has recently been on target. Much will depend on how the BoE justifies such a move.
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