Key Points:
Domestic Risks Persist:Goldman flags the risk of renewed fiscal premium concerns in the UK, especially if fiscal headroom tightens. Additionally, a dovish BoE pivot could emerge, though it may partially ease those fiscal concerns.
Substitutive Risk Factors:A dovish BoE and fiscal risks are seen as interlinked—with one likely tempering the impact of the other—making sustained outperformance of GBP more difficult relative to peers.
Goldman Sachs remains bullish on GBP/USD in the broader European FX context, but sees limited upside for GBP vs. other European currencies near term due to the UK’s fiscal and monetary policy ambiguity.
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This article was written by Adam Button at www.forexlive.com. Read More Details
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