Research Team at Natixis, suggests that the GBP/USD can be expected to extend its correction given prospects of a hard Brexit and of a slowdown in British growth.
“We have revised our target for the GBP/USD from 1.22 to 1.18 for coming months.
In the short term, we do not expect any improvement, as Theresa May is most reluctant to ease her stance on immigration, while European leaders oppose any compromise, as they want to discourage other Member States from following the UK’s lead.
Finally, with another referendum on Scottish independence looming on the horizon, it is fair to say that the UK’s woes are just beginning. Finally, sterling’s slide will complicate the task of the Bank of England in guaranteeing price stability, while the consensus is that there will be no further cuts in the bank rate.”