SocGen: We Expect Further Weakness in the Gilt Market and Sterling in the Coming Days

By eFXdata — May 12 - 11:30 AM

SocGen Research sees a scope for further weakness in the UK Gilt markets and GBP over the coming days.

"30-year Gilt yields are making a beeline for 6%, reflecting growing pressure on Prime Minister Starmer to resign, and the possibility that the Government will shift further to the left. GBP/USD is currently down 0.6% but a 0.2% rise in EUR/GBP is hardly dramatic. However, we are likely to see further gilt and sterling weakness in the coming days," SocGen notes.

"The UK’s combination of sticky inflation and weak growth is a recipe for the pound’s long-term decline to continue. We won’t be surprised when EUR/GBP eventually breaks above the Liz Truss spike (just below 0.93 in 2022) -as long as it doesn’t happen this year. The better trade for today however, is to short GBP/SEK, as SEK weakness will be reversed when the global trade outlook eventually improves," SocGen adds.

Source:

Société Générale Research/Market Commentary

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SocGen: We Expect Further Weakness in the Gilt Market and Sterling in the Coming Days

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