GBP faces ‘existential crisis’ amid ‘increasingly challenging’ BOE communication – BofA
|Kamal Sharma, a London-based foreign-exchange strategist at Bank of America (BofA), offers a bearish outlook on the pound, predicting further declines during this year.
Key quotes
“Sterling's fall from grace has been epic given last year's euphoria and, in many ways, has caught the investor community by surprise."
Threadneedle Street is facing “unique” challenges including Brexit that are creating severe supply-side problems.”
“This has resulted in a confusing communication strategy: hiking rates against a sharply slowing economy is never a good look for any currency."
“We sense something is changing in the UK with the BoE increasingly hard to decipher and less transparent; a failure to discuss and acknowledge that Brexit has been a significant headwind to the supply side and sense that the BoE is losing control over its mandate.”
Also read: Why Boris' scandals (and two other reasons) may boost GBP/USD toward 1.27, 1.2780
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