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Imre Speizer, Research Analyst at Westpac, expects GBP’s decline to persist amid ongoing political headwinds and a rising US dollar.

Key Quotes

“The decline since April is looking technically stretched, though, so that further downside from here – potentially to the 1.2500 area – may be slower than early August’s pace.”

“The recent uptick in headline inflation and fall in unemployment to a 43-year low haven’t helped GBP much since wage inflation remains low and markets are skeptical about further BoE rate hikes. BoE Governor Carney said that market pricing for one rate rise a year for the next several years was a good rule of thumb.”

“Carney also said the chances of a no-deal Brexit are uncomfortably high. As long as Brexit uncertainty persists, GBP should remain an underperformer – it is the worst among G10 since mid-April.”