GBP/USD clings to modest daily gains at around 1.1450. Looking ahead, economists at HSBC expect the pair to test year-to-date lows in the coming weeks.
Fiscal cost of plans to alleviate energy costs could pressure GBP
“We suspect GBP/USD is set to challenge the YTD lows again over the coming weeks.”
“A likely acceleration in the Bank of England (BoE) tightening pace looks set to increase recession fears. For the upcoming BoE meeting on 22 September, the market is 80% priced for a 75 bps hike rather than 50 bps (our economists expect this smaller move), which creates some downside risk for GBP.”
“The fiscal cost of the UK government plans to alleviate energy costs could also pressure GBP, especially give the ongoing deterioration in the external balance.”