The dollar rises by 3.4% vs the British Pound on the day. The forces that support the USD keep getting stronger. It is not that any of the other currencies look any attractive. The risks are for a stronger USD before it weakens towards its long-term equilibrium. A jarring 2H for GBP no far as weakness becomes more broad-based. We think BoE rate hikes are unlikely to come to the rescue. Structural dual deficits B. Brexit will likely continue to weigh. Hard to make a case for imminent GBP revival against current policy backdrop and structural dynamics. Risk premium is embedded. - BofA Strategy
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