Strategists at Rabobank point out that the change in the Bank of England’s language favours the doves, they see scope for further rate rises. They continue to expect poor United Kingdom fundamentals to be a drag on the British Pound.
Key quotes:
“The USD has found further traction on the back of the January US jobs report. That said, the single currency has still managed to climb against the beleaguered GBP, with the latter undermined by the market’s interpretation that the BoE may be even closer to peak policy rates. EUR/GBP continues to edge towards our 0.90 target. We maintain our forecast of EUR/USD1.06 on a 3 month view.”
“Weak productivity, low investment growth, high inflation, recession conditions (albeit at a less severe pace that previously signalled by the Bank), and a current account deficit are all likely to weigh on GBP this year. We continue to expect EUR/GBP to grind higher to 0.90 by the middle of the year and while we see scope for another move below GBP/USD 1.20 on a 3 month view.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD turns south toward 0.6500 as US Dollar finds fresh demand
AUD/USD hs turned south toward 0.6500 in Asian trading on Wednesday. The pair lacks bullish conviction after the PBOC left the Lona Prime Rates unchanged. Escalating Russia-Ukraine geopolitical tensions and renewed US Dollar demand keep the Aussie on the edge ahead of Fedspeak.
USD/JPY jumps back above 155.00 as risk sentiment improves
USD/JPY has regained traction, rising back above 155.00 in Wednesday's Asian session. A renewed US Dollar uptick alongside the US Treasury bond yields and an improving risk tone counter Japanese intervention threats and Russia-Ukraine tensions, allowing the pair to rebound.
Gold advances to over one-week high on rising geopolitical risks
Gold price (XAU/USD) attracts some follow-through buying for the third consecutive day on Wednesday and climbs to a one-and-half-week high, around the $2,641-2,642 region during the Asian session.
UK CPI set to rise above BoE target in October, core inflation to remain high
The UK CPI is set to rise at an annual pace of 2.2% in October after increasing by 1.7% in September, moving back above the BoE’s 2.0% target. The core CPI inflation is expected to ease slightly to 3.1% YoY in October, compared with a 3.2% reading reported in September.
How could Trump’s Treasury Secretary selection influence Bitcoin?
Bitcoin remained upbeat above $91,000 on Tuesday, with Trump’s cabinet appointments in focus and after MicroStrategy purchases being more tokens.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.