Societe Generale Research flags a scope for further GBP/USD downside over the coming weeks.
"The pound is often the FX market’s favourite short. Journalists this week have been keen to ask how far sterling can fall in the weeks ahead, by which they mean ‘how far can GBP/USD fall’ with no consideration of the fact that the biggest driver of where Cable goes is what happens to EUR/USD. But sterling found itself some home-grown problems this time," SocGen notes.
"For much of this year, GBP/USD has fallen more slowly than EUR/USD, because the UK’s MPC is likely to raise rates long before the ECB. Now however, a cocktail of economic worries (thanks in part to Omicron) political turbulence (where do I start with the Government’s faux pas?) and the MPC’s policy miscommunications, are feeding bearish sentiment. And the bears are hungry!," SocGen adds.
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