GBP/USD: October low of 1.2037 will be the key support level – MUFG

Economists at MUFG Financial institution analyze GBP outlook sooner than the BoE announcement on Thursday.

Dilapidated economic utter

The worsening economic recordsdata has been determined and is usually clearly acknowledged by Governor Andrew Bailey in the press convention. We discover about this inevitable acknowledgement of weaker recordsdata and a few proof that the labour market cases cloak reduced wage inflation risks as helping to push yields lower.

The UK OIS curve has extra likely to adjust lower additional out – honest 25 bps worth of cuts by September 2024 looks too conservative to us and a less hawkish verbal exchange on Thursday would possibly per chance presumably push yields at the merit damage of next one year lower – resulting in some additional GBP underperformance.

For GBP/USD, the October low of 1.2037 would possibly per chance be the most critical enhance degree.

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