Goldman Sachs on BOE/ GBP: ‘Markets are now pricing an even chance of a hike by year-end’

In a latest research note, analysts at Goldman Sachs projected GBP/USD at 1.20 in the coming year, in the wake of bleak picture of the UK economy, as the BOE is likely to remain less hawkish on their monetary policy.

Key Quotes:

“Strong data have called into question the MPC's highly accommodative policy stance”

“Markets are now pricing an even chance of a hike by year-end”

“Our analysis suggests that MPC's post-referendum response appears appropriate as imported, not domestic, price pressures drove inflation and the economy slowed due to weaker demand”

“Looking ahead, we expect the MPC to unwind stimulus if domestic price pressures emerge or, more importantly, if demand does not slow significantly”