GBPUSD has rallied on expectations that the UK’s fiscal plans will be more credible and the dollar will be softer. However, ING economists they expect the pair to revert downwards to the 1.10 zone.
The British economy will contract every quarter in 2023
“We doubt that 2023 will be the year of a benign dollar decline. And the risk is that the Fed will keep rates elevated for longer. Given the large current account deficit of the pound sterling and its transition to high beta in the outside environment, we believe it is too early to expect a sustained recovery in this regard.”
“We are leaning towards a return to the 1.10 zone by the end of the yearas the Government introduces Austerity 2.0 and the Bank of England cycle reprices lower.”
“We expect the UK economy to contract every quarter in 2023which makes it a very difficult environment for the British pound.”
“GBPUSD realized volatility has returned to levels seen during Brexit and our market call for 2023 is that these types of levels will be morenot less, common.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
