Goldman Sachs analysts suggest the British Pound can stabilize despite recent declines, although risks remain:
GBP is "down but not out"The background to GS' views are the recent sharp weakness in the pound:
Goldman Sachs note three reasons to expect GBP stabilisation and recovery:
recent GBP weakness partly reflects a broader risk-off sentiment in FX markets, which may reverse as risk appetite recoversfiscal risks in UK Gilts could compress, reducing pressure on the poundupcoming hard data on increased government spending and investment might surprise positively, bolstering sentimentRisk to the view include:
a hawkish Federal Reserve, combined with strong U.S. inflation and labor data, creates a challenging environment for GBP/USD ... difficult for the Pound with higher global yields, as well as to Dollar strength more directlypotential "escalation in the loop of sell-offs in UK assets and a more strenuous fiscal position"GS prefer GBP against EUR:
the Euro may face challenges from potential tariffs under TrumpCable up
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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