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- GBP/USD to face further downward pressure in the coming weeks – HSBC
GBP/USD to face further downward pressure in the coming weeks – HSBC
Despite policy U-turns, the GBP still faces structural and cyclical challenges. Therefore, economists at HSBC expect GBP/USD to head lower in the coming weeks.
Further tough fiscal decisions will be required
“A series of fiscal policy U-turns, alongside temporary support for the UK government bond (known as ‘gilt’) market from the Bank of England (BoE), have provided relief for the GBP for now. However, with the UK’s fiscal, monetary and political challenges, the GBP is likely to face further downward pressure in the coming weeks.”
“For the British government, further tough fiscal decisions will be required, as debt-to-GDP ratios are set to rise and the fiscal deficit could land at about 6% of GDP.”
“For the 3 November BoE meeting, the GBP could suffer from a BoE tone that suggests the economic outlook may be even weaker than previously expected and that the market is too hawkish on rate hikes.”
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