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Goldman Sachs discusses GBP outlook and maintains a bearish bias over the coming weeks:
"The Bank of England delivered another 25bp hike last week-an underwhelming response to acute inflation pressures-but signalled that it is willing to potentially act more "forcefully" if inflation proves more persistent (which we interpret to be a reference to 50bp hikes in the next couple of meetings),' GS notes.
"We and the market interpreted last week's policy statement as a slight softening in the "transitory" inflation view. Still, some on the MPC appear to have a high bar for what would qualify as"more persistent" inflation pressures, and the BoE's actions continue to stand out relative to its DM peers. So, we continue to look for further Sterling underperformance ahead, especially as the ECB debates a faster exit with a credit backstop in place, but the risk-reward of Sterling shorts has deteriorated somewhat, in our view," GS adds.
GBP daily candles:
