26 Sep 2013
Flash: GBP/USD to reverse much of its recent gains - HSBC
FXstreet.com (Barcelona) - While it is tempting to believe a stronger UK economic may lead to higher rates as as the housing market picks up and consumers' spending increases, according to HSBC Strategists, the reality does not paint such a rosy picture.
Key Quotes
"If a stronger UK economy were the case, then the Bank of England would find it very difficult to keep rates at a record low for a further long period, and the recent rally in sterling could continue."
"However, the more likely case is the upside surprises in the UK turn into downside surprises as the reality of negative real income growth come back to bite."
"Meanwhile, in the US tapering is just a matter of when not if. In this case, we are likely to see sterling reverse much of its recent rise particularly against the USD."
Key Quotes
"If a stronger UK economy were the case, then the Bank of England would find it very difficult to keep rates at a record low for a further long period, and the recent rally in sterling could continue."
"However, the more likely case is the upside surprises in the UK turn into downside surprises as the reality of negative real income growth come back to bite."
"Meanwhile, in the US tapering is just a matter of when not if. In this case, we are likely to see sterling reverse much of its recent rise particularly against the USD."