GBP/USD: Conviction for a return to 1.2450 is low – SocGen

GBP/USD recovered from below 200-Day Moving Average at 1.1938. However, economists at Société Générale believe that the pair is unlikely to stage a sustainable rise.

Modes UK PMI improvement may not be enough to lift GBP/USD

“The Pound fought back from below 1.20/USD and the 200-DMA (1.1938) on Friday but conviction for a return to 1.2450 is low based on the outlook for a widening in US/UK rate differentials. Based on implied market rates, the Fed/BoE spread could widen to almost 100 bps in 2Q, keeping GBP/USD in check.”

“The PMI for February is the pick of the UK data calendar tomorrow. We forecast a modest improvement to 49.2. This may not be enough to lift GBP/USD with investors instead bracing for the FOMC minutes and US PCE inflation.”

Feb 20, 2023

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