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Nov 16 - 10:55 AM

GBP: High Inflation & Weak Growth Remains Unfavorable Mix For The Pound - MUFG

By eFXdata  —  Nov 16 - 10:10 AM

MUFG Research maintains a cautious bias on GBP over the coming weeks.

"The economic data releases from the UK this week have provided further evidence that the BoE continues to face an uncomfortable mix of elevated inflation and weak growth. The release of the latest UK labour market report revealed that wage growth remains uncomfortably strong amidst tight labour market conditions.

The release of the latest UK CPI report for October also revealed that inflation surprised to the upside again reaching a new cycle high of 11.1%. However, it should be the peak for the cycle with inflation set to fall now after the government froze the energy price cap at least until April of next year," MUFG notes.

"The unfavourable combination of elevated inflation and recession risk in the UK, and likelihood the BoE will disappoint rate hike expectations supports our view that the pound will continue to underperform more broadly," MUFG adds.

Source:
MUFG Research/Market Commentary

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