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- GBP/USD remains vulnerable to flushing towards 2020 low of 1.1410-25 – Westpac
GBP/USD remains vulnerable to flushing towards 2020 low of 1.1410-25 – Westpac
Burgeoning political tensions both within the UK and with the EU and the increasing challenges the UK faces over high inflation and recession risks will continue to weigh on GBP, according to economists at Westpac. They note that cable is at risk of tumbling to 1.1410-25.
Political pressures are building again
“Markets are pricing in a steady series of rate hikes from BoE. The OIS market indicates over 30 bps pricing for this week, reflecting the bias for a more proactive BoE to fight surging inflation with the next updates for May inflation being released next week.”
“Not only is Johnson’s premiership remaining under question, but there are building pressures within the broader UK. Meanwhile, Scotland’s SNP First Minister Sturgeon has begun the process to try to hold another independence referendum. Both are likely to smoulder into through UK’s summer and sustain downside pressure on GBP.”
“Despite prospects of higher rates, GBP remains vulnerable to flushing towards 2020’s low of 1.1410-25, unless it can regain levels above 1.2275.”
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