GBP/USD: Not enough good news to turn bullish – Rabobank

GBP/USD has been fluctuating around the 1.13 area today. Economists at Rabobank have been bearish on the pound for many months and believe that there is still too much uncertainty in both the UK economic and political outlooks to turn constructive on the outlook for GBP.

UK fundamentals are still sour 

“Hawkish remarks from BoE Governor Bailey over the weekend confirm that the BoE is preparing to raise rates aggressively going forward. This will lend some support to the pound, though higher rates combined with the reversal of Truss’ tax pledges, underpins the recessionary outlook for the UK.” 

“Aside from awakening a few bargain-hunters, the calamitous events of the past few weeks will not have done anything to tackle the lack of investment growth that has been evident in the UK in recent years, nor will it have impacted the wide current account deficit.”

“Our three-month forecast of 1.06 appears a little further away than it did a few days ago. Even so, we have not yet seen enough good news to revise this higher.”