News & analysis

Our relatively bullish view on both the UK economy and on sterling has been somewhat vindicated in recent months. The UK no longer looks like an inflationary outlier, activity readings are signalling a strong rebound in growth, and forward-looking indicators are suggestive that this is likely to be sustained, leaving the UK economy on track to engineer something of a soft landing. Given this economic context, it is unsurprising that the pound has been the best performing G10 currency against the dollar YTD, having declined less than a percent at the time of writing. That said, despite keeping pace with the dollar, the pound’s performance on crosses, particularly against the euro and the Canadian dollar, has been underwhelming when considering sterling’s strong fundamentals. We expect this to change in coming months, however, as the UK’s better cyclicals justify stronger capital inflows and moderately wider medium-term rate differentials. 

You can read our GBP Outlook in full here:

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Author: 

Nick Rees, FX Market Analyst

 

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