Looking at forward curves, it is notable that UK interest rates continue to trade so close to the US, notes ING FX strategist Chris Turner.
UK rates to trade lower from August
“UK interest rates continue to trade so close to the US. Both are pricing in around 45bps of rate cuts this year and both have a terminal rate for upcoming easing cycles around the 3.30/3.40 area %. Our conviction this summer is that UK rates will appreciate lower starting with a rate cut in August and this should lead to a lower British pound (GBP).
“We won’t hear anything more from the Bank of England (BoE) until after the general election on July 4. But after that, we would be looking for the most dovish members of the seven who voted to keep rates unchanged last week to make hear their voices.”
“Uncertain developments in the Eurozone suggest that EUR/GBP could struggle to break back above 0.8490 in the near term. But a cross rate like GBP/NOK could decline next month if both US rates “like the BoE doves emerge in July.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
