The pound is facing a rate hike for the first time since the crisis. And the big question is: what’s next? Here is the view from ING:
Here is their view, courtesy of eFXnews:
ING FX Strategy Research discusses GBP/USD outlook ahead of the BoE November policy meeting on Thursday.
“BoE officials will need to give the illusion that this is more than a one-and-done policy move to nip their currency-related inflationary concerns in the bud. We expect them to be successful in doing so, with the signal of a ‘gradual’ tightening cycle retaining an element of policy flexibility – while steepening the UK rate curve a bit.
Yet, we’re aware that the big picture focus for GBP remains Brexit – and we expect there to be some focus on a parliamentary testimony by Brexit Secretary David Davis on the economic implications of a ‘No Deal’.
An optimistic GBP outlook does require having bold faith in politicians to follow the economically rational path of a mutual divorce agreement with a status-quo transitional period until trade talks are over,” ING argues.
“With the ‘Carney Put’ in place, we are more comfortable in enlisting such faith in politicians and retain a constructive GBP outlook (GBP/USD 1-month target 1.35),” ING concludes.
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