By eFXdata — Sep 01 - 08:33 AM
Societe Generale Research discusses GBP outlook and maintains a bearish bias over the coming weeks.
"Sterling has been helped by rising short-term rates in recent weeks. However, with more and more ECB council members pushing the idea of a 75bp hike next week, sterling’s support is waning. Meanwhile, higher Gilt yields aren’t so helpful when people see them as the price the UK pays to suck in huge amounts of money needed to balance the budget in the months/years ahead," SocGen notes.
"The UK economy is in recession, the balance of payments is catastrophic and more/faster rate hikes won’t do much to restore confidence. In times like this, Europe’s strong balance of payments position makes a big difference, as higher yields and a battered euro will persuade European investors to keep more savings at home," SocGen adds.
Société Générale Research/Market Commentary