According to Jane Foley, Head of FX Strategy at Rabobank, the Sterling could lose some traction in the 3-6 month horizon.
“Since the BoE turned clearly hawkish in September 2017, GBP has drawn support from expectations of higher interest rates. News in December of an EU/UK agreement on the legacy issues connected with Brexit and the subsequent confirmation of a deal regarding the post Brexit transition period have also supported sterling”.
“While a May rate hike from the BoE is largely priced-in, the pound may find further support if the MPC lean towards another rate hike in November. That said, we expect anxiety regarding the EU/UK trade talks to undermine the pound on a 3 to 6 mth view. On a 12 mth view we expect GBP to rise on an anticipated free trade deal”.
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