The market has been trying to decide on Sterling’s likely move over the coming months – but it has not made up its mind.
Sterling bulls (buyers) were dealt a hammer blow over the past month due to a major repricing of a rate hike this month (from near certainty to zero). With UK macro headlines continuing to run weak, especially on retail-related areas, this will hem in BoE’s hawkish bias. For example, Visa Consumer Index is showing weakening trends (down 11 months over the past year) despite low unemployment figures.
Technically, Cable (GBPUSD) is near-term oversold, making it favourable to a temporary rebound. But to make new long-term highs requires a healthier economy that raises the prospect of a rate hike later this year. For now that prospect remains dim.
Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.