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This month, the cable has lost around 2.5%, and analysts at CIBC Capital Markets expect near-term headwinds to persist. 

Stay up to speed with Yohay Elam’s last analysis

Key quotes

“We look for leveraged players to rebuild shorts, as no-deal Brexit risks move back into focus. Moreover, with the scale of the potential correction in Q2 GDP likely to be greater than other comparative markets, due to the slower exit from the lockdown, sterling could temporarily trade below our 1.20 June-end target.”

“While the BoE is mindful of reviewing its effective lower bound, we would not expect, under current circumstances, the bank to determine that negative rates would benefit the UK economy. However, we could see the bank adopt further easing measures, such as an additional £100bn of QE.” 

“Q3 20: 1.24 | Q1 21: 1.30”