On Thursday, the Bank of England maintaining a hawkish stance led GBP/USD higher. Nomura economists analyze the pair’s prospects.
GBP/USD seen at 1.27 and 1.28 in the first and second quarter of 2024, respectively.
The strength of the Pound Sterling was undoubtedly boosted by the Bank of England announcement. However, the weakening of the Dollar has been the driving force in recent sessions. The market has continued to unwind its bullish exposure to the USD.
We believe that this USD bearish trend will become more evident in the future, and this will help GBP/USD rise. That said, we do not expect UK economic growth in the coming quarters to be as strong as that of the US and, as a result, sluggish growth in the UK is likely to be a drag on the GBP. Therefore, on a net basis, we think the rise in GBP/USD will be modest, and we expect 1.27 and 1.28 in the first and second quarter of 2024, respectively.
Source: Fx Street
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