GBP/USD: UK’s poor fundamental backdrop will to continue to act as a downward drag – Rabobank

For months, economists at Rabobank have labelled the pound a vulnerable currency. And the GBP/USD pair is set to remain under downward pressure for the time being.

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“It is possible that in a few hours, former Chancellor Sunak will become PM. If Sunak is confirmed as PM, GBP may rally a little further. That said, in our view the UK’s poor fundamental backdrop suggests that the pound is likely to continue to struggle vs. the USD in the coming months.” 

“While the BoE is expected to announce a hefty rate hike on November 3, this may do little to support cable given expectations of further aggressive rate hikes from the Fed.”

“We retain a three-month forecast for GBP/USD at 1.06.”