Analysts at CIBC forecast the GBP/USD pair at 1.23 during the third quarter and at 1.26 in the fourth. They do not expect the Bank of England to introduce negative interest rates.
Key Quotes:
“A rising tide of job losses as government support is progressively withdrawn risks an economic disappointment and Sterling remaining on the defensive. While we do not expect the BoE to sanction negative rates, the fact that 3m Libor has traded below the base rate since early July shows that investors remain wary of rate cuts ahead.”
“The countdown to Brexit at year-end continues and an agreement remains far from certain. Although one of the red lines, regarding the role of the European Court of Justice, seems to be have been clarified, fishing rights and level playing field criteria remain unresolved. Expect the discussions to stretch into Q4. Only when right up against the deadline can we expect a deal and the Sterling relief it will provide.”
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