Recently, the British pound has largely rallied along with risk appetite. Since the external background is going to improve, HSBC economists expect the pound to strengthen against the dollar in 2023.

GBP outperforms, despite tough UK outlook

“The prospect of a fiscal deficit of around 5% of GDP next year is likely to keep GBP structural concerns to the fore, but At least the situation won’t get worse. This may be enough to support a currency that has already weakened a lot.especially since there are already signs that the trade balance has begun to improve.”

“The domestic situation is likely to remain difficult, but external sentiment has been the dominant factor for the British pound in recent years. In an environment where global growth bottoms, rate volatility peaks and risk sentiment picks up, GBP is likely to benefit in 2023.”