GBP expected to weaken further – Danske Bank

Sverre Holbek, Senior Analyst at Danske Bank, sees GBP losing ground in the next months.

Key Quotes

“With all focus today on the BoE meeting, FX markets will naturally look for GBP triggers”.

“Market expectations are already running very high and with a full cut and some QE priced in for today’s monetary policy decision, we prefer to stay sidelined spot/outright”.

“However, we do see risks skewed towards a weaker GBP – not only on the announcement – but also over the coming months, as additional monetary easing and a reversal of financial account flows are likely to weigh further on the sterling”.

“We therefore recommend EUR- and DKK-based real money funds to maintain a high hedge ratio on GBP exposure and for corporates to lock in GBP income via FX forwards”.