Analysts at Morgan Stanley offer their bearish outlook on the British pound, expecting the Bank of England (BOE) to shift towards a dovish pivot in the coming months.
Key quotes
"We continue to think risks are skewed to the downside for GBP/USD as the UK faces a sharp, consumer-led growth slowdown, with consumer confidence at a five-decade low. Markets are still pricing in too much policy tightening from the BoE in our view, and our economists continue to expect a dovish pivot by the BoE (in August).”
"Brexit uncertainty is another factor that is likely to put further downward pressure on GBP, seeing as our idiosyncratic risk premium model is still suggesting little to no risk premium priced in at the moment. Equities and the broader risk sentiment have been important drivers of GBP performance in recent months.”