The GBP/USD continued its rebound over the past week, climbing above the September 13 high of 1.1738. According to economists at MUFG Bank, the “cable” has a chance to rebound further due to the ongoing sell-off of the dollar. However, despite the temporary strength of the pound sterling, strategists at ING predict that in the coming months the quote will return to the level of 1.10.
The pound should perform poorly against most non-dollar G10 currencies going forward
1.1670/1.1750 could be a short-term support level for GBP/USD
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Pound (GBP/USD) may extend its recent upward bounce towards 1.20 – MUFG
The report said while there is room for a further bounce on the cable towards 1.20 in the near term as the USD corrects downwards from significantly overvalued levels, analysts do not expect the GBP to benefit against other G10 currencies, given the weak growth prospects in the UK and the gradual withdrawal of markets from expectations of BoE interest rate hikes.
GBP/USD could return to 1.10 in the coming months – ING
The GBP/USD currency pair is most likely preparing a downward correction. ING economists expect the cable to return to 1.10 in the coming months.
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UK Chancellor Jeremy Hunt is ramping up rhetoric that Thursday’s autumn announcement will be painful – involving tax increases for everyone and big cuts to government spending. Neither choice is a good political outcome, but failure to implement it would trigger another round of sales of UK Treasuries and the pound, the report said. Analysts believe that the 1.1670/1.1750 area may provide short-term support for GBPUSD before a possible rebound to 1.20 as a result of a further short squeeze (betting on the decline of the pound has been a popular move among fund managers recently).
“However, from a broader perspective, even the current GBP/USD levels close to 1.18 should prove attractive to those with GBP receivables. We suspect “cable” may return to 1.10 in the coming months.
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