Pound Sterling’s current strength unjustified – Commerzbank

The Pound Sterling (GBP) has emerged as one of the year's top two performers among the major currencies in recent weeks. Economists at Commerzbank analyze GBP outlook.

The Pound should be treated with caution

The only question is how long the Pound's strength will last. At the moment it is still a rather shaky strength. Not like the USD strength of late last summer, which was fuelled for months by strong data and an equally hawkish Fed. Rather, it is a fragile little plant that could break again in the face of headwinds.

Today's data should therefore continue to confirm the recent picture, i.e. the unemployment rate should not rise too much and wage growth should not slow down too much. Only then should the BoE continue to focus on future rate cuts. And only then will further Pound strength be justified. Until then, however, I would also be cautious about the GBP at present.