The GBP/USD bounces back to 1.21 but strong headwinds remain. Scotiabank economists they expect the cable to drop below 1.20 in the coming weeks.
A clear improvement in broader market sentiment is needed to reclaim the 1.20 area
“In addition to the UK’s economic weakness, tensions between the EU and the UK over pressure from No10 to unilaterally rewrite the Northern Ireland Protocol and pressure from Sturgeon for a Scottish independence vote next year are weighing on GBP sentiment.”
“We think the Bank of England will deliver a less rosy message tomorrow than markets are expecting, which, combined with a big Fed hike today, sees losses extend a few cents below 1.20 in the coming weeks. “
“The British pound would need a clear improvement in market sentiment in general (and therefore in dollar losses in general) to clearly recover above the 1.20 zone.”
Source: Fx Street
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