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Nov 09 - 10:55 AM

GBP: Lower Volatility But Not Of The Woods Yet - Credit Agricole

By eFXdata  —  Nov 09 - 09:30 AM

Credit Agricole CIB Research maintains a cautious bias on GBP in the near-term.

"The GBP has become a far less volatile currency since the election of PM Rishi Sunak: the currency has settled to trade in relatively tight ranges vs both the USD and the EUR of late. Abating UK sovereign credit risks, receding Brexit fears and easing UK financial conditions could continue to push GBP volatility lower in the very near term. The latest developments should not mean that the GBP is out of woods just yet, however. Indeed, we think that the very weak UK economic outlook would be made even worse by the aggressive fiscal austerity measures that Chancellor Jeremy Hunt will announce next week," CACIB notes.

"In the near term, however, the prospect for a sharp economic downturn could mean that the BoE would disappoint the still relatively hawkish market rate hike expectations. We therefore maintain a cautious outlook on the GBP," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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