With expectations of a December rate hike from the Bank of England (BoE) tapering off amid growing concerns about the covid variant Omicron In the UK, Societe Generale analysts offer their bearish outlook on GBP / USD.
“The British pound is often the currency market’s favorite bearish trade. This week, journalists have been willing to ask how far the British pound can fall in the coming weeks, referring to ‘how far GBP / USD can fall’. Without taking into account that the main engine of where the GBP / USD goes is what happens to the EUR / USD. But the British pound encountered some homegrown problems this time..”
“For much of this year, GBP / USD has fallen more slowly than EUR / USD, because the UK’s Monetary Policy Committee (MPC) is likely to raise rates much earlier than the ECB. Now, however , a cocktail of financial concerns (thanks in part to Ómicron), Political turmoil and poor political communications from the MPC are fueling bearish sentiment. And the bears are hungry!“.
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