GBP/USD: Staying Structurally Constructive But Don’t Expect A Quick Run Towards 1.40 – CIBC

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The pound is looking for a direction at the beginning of the new year.

Here is their view, courtesy of eFXdata:

CIBC Research discusses GBP/USD outlook and maintains a structural bullish bias through the coming months. CIBC targets GBP/USD at 1.33 in Q1. 

Having seen Sterling rally around 13% since no-deal Brexit fears peaked in early September, don’t expect a quick run for GBP gains towards the 1.40 area, as the market refocuses on the narrow window for UK-EU trade negotiations,” CIBC notes.

“Removing election risk and adding near-term Brexit certainty to the equation is supportive for consumption, thereby easing concerns of BoE policy stimulus in H1 2020. However, trade negotiation headwinds still present a barrier to foreign direct investment in the near-term. As such, look for sub-trend growth and constrained investment inflows to slow the pace for further GBP gains in H1 2020,” CIBC adds.

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