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- GBP/USD to tackle 1.25 amid cautious BoE vs. hawkish Fed – Scotiabank
GBP/USD to tackle 1.25 amid cautious BoE vs. hawkish Fed – Scotiabank
Signs point to the Bank of England (BoE) disappointing market expectations for the rest of the year. Another leg lower in yield differentials could dive the GBP/USD pair to a test of 1.25, economists at Scotiabank report.
BoE repricing is a risk
“The spread of 2-yr Gilts vs USTs has oscillated around -1% for the past four weeks or so but looks set to mark a new pandemic low in the coming weeks that would drive additional GBP weakness.”
“Another leg lower in yield differentials amid a cautious BoE vs a hawkish Fed (as well as some near-term political anxiety ahead of the May 5 local elections) could fuel GBP losses to a test of 1.25.”
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