Goldman Sachs maintains a constructive view on GBP/USD, citing UK resilience to US trade shocks and European FX strength. However, they advise caution on Sterling relative to other European currencies due to lingering domestic risks.
Key Points:
GBP/USD Outlook Positive:Sterling continues to benefit from broad EUR FX strength and its lower vulnerability to US tariffs, keeping the upside case for Cable (GBP/USD) intact.
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.
Sterling vs. European FX:Despite the broader bullish bias on GBP, Goldman does not see a strong case for GBP outperformance vs. EUR, CHF, or SEK, given domestic uncertainties.
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.
Conclusion:
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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