Goldman Sachs has cut its forecasts for GBP/USD to:
- 1.24 in 3 months, from 1.30 previously
- 1.24 in 6 months, from 1.33
- 1.28 in 12 months from 1.35
For EUR/GBP on the same time horizons:
- 0.85 from 0.81
- 0.85 from 0.79
- 0.84 from 0.80
Goldman Sachs cite the less dovish US backdrop:
- “With hawkish policy repricing driving markets recently, the pro-cyclical backdrop for GBP is less supportive than it was earlier in the year”
And also comment from April from Bank of England Deputy Governor Ramsden:
- “Sterling sentiment turned decidedly more bearish among our client base following comments from Deputy Governor Ramsden, who noted that he felt the balance of risks to inflation were now tilted to the downside. And he stated that economic developments suggested to him that the restrictive stance of policy was reducing the more persistent components of inflation”
While Bank of England Chief Economist Pill:
- “later—and more hawkish—speech poured cold water on bearish GBP bets. Pill directly addressed Ramsden’s earlier comments, noting that while he does think that the persistent components of inflation are being squeezed out of the system by restrictive policy, he does not see any reason to believe that it is happening more quickly than expected 6 months ago”
This article was written by Eamonn Sheridan at www.forexlive.com. Source