The GBP continued to gain ground in January, mainly against the USD. The economists at MUFG Bank they believe that the pound could struggle in the short term before a sustained appreciation trend emerges.
Global risk, a key support for the GBP
“The sharp decline in natural gas prices and the continued reopening of China have helped lift expectations for global growth and equity markets. The rolling correlation of the GBP and global equity markets is currently nearing all-time highs decades, underscoring the importance of broader market conditions.”
“A sense of political stability, a less severe recession and peaking policy rates should help confidence in the UK improve later this year. However, the likelihood of worsening risk sentiment remains.” from global investors, which could weaken the GBP in the short term before a sustained appreciation trend emerges.”
Source: Fx Street
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