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Oct 18 - 12:55 PM

GBP: Why Risk Remains Mostly To The Downside Coming Weeks - Credit Agricole

By eFXdata  —  Oct 18 - 11:00 AM

Credit Agricole CIB Research maintains a bearish bias on GBP over the coming weeks.

"We think that for the GBP to extend its recent gains, we need to see further retreat of UK sovereign credit risks. We further continue to see the risks to the downside for the currency in the coming weeks. This is because the announced and future fiscal austerity measures will increase the UK recession risks but dampen some of the inflation pressures given the government’s support for household energy bills," CACIB notes. 

"We therefore think that the BoE will disappoint market rate hike expectations in the coming months. In addition, the UK external imbalances are expected to deteriorate further and add to the pressure on the GBP," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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