![]() "The further increase in interest rates will weigh on the economy and we expect only very moderate growth in the coming quarters, with the risk to that forecast clearly being to the downside," he notes. ![]() Schumacher sets the stage for cautious expectations in the coming months, warning of the impact of rate increases. However, the absence of accelerating growth and the impending rate hikes cast a shadow over the economy. Unlike its European counterparts, the UK managed to avoid a recession. This necessity for a more aggressive monetary policy comes at a challenging time for the UK, with mixed economic signals and the prospect of political upheaval on the horizon. This will by itself force the Bank of England to be more hawkish than otherwise," says Schumacher. "The misreading of the inflationary pressure is starting to dent the Bank of England's credibility. ![]() The strategist emphasises the role of perceived inflation missteps in eroding the BoE's credibility, potentially pushing the bank towards a hawkish stance. "The fact that wage growth also remains very strong (the 3-month moving average for 'weekly pay' stood at 6.6% in May) shows that the underlying inflationary momentum is likely to remain high," he adds. This rising tide of inflation, bolstered by robust wage growth, is likely to remain a force to be reckoned with. "More specifically, while there is strong evidence in the US and the euro area that core inflation has peaked, it continues to rise in the UK," says Dirk Schumacher, Managing Director at Natixis. They point out that while the US and euro area are seeing signs of inflation peaking, the UK continues to grapple with rising costs. The strategists predict the Bank of England (BoE) may need to hike the bank rate to 6% in the near future - a decision that could exert significant pressure on the Pound Sterling (GBP). The firm does not anticipate additional increases in GBP/USD until it possibly inches up to 1.30 after a year.Īs a reference, the Pound to Dollar exchange rate (GBP/USD) is quoted at 1.2839.įX analysts at Natixis paint a picture of a UK economy grappling with stubborn inflation, mixed growth signals, and looming political risks. On the other hand, Natixis' short-term GBP/USD predictions show a modest appreciation, placing the pair at 1.29 for the three-month outlook, corresponding to a 0.48% increase for USD purchasers. Over the nine-month view, they see a further rise in EUR/GBP to 0.89, before falling back on the twelve-month view to 0.88. Over the six-month view, the analysts forecast the Pound to fall further against the Euro, with the EUR/GBP climbing to 0.88. This rate translates to a GBP/EUR of 1.1494, marking a 1.79% decrease for those buying Euros with Sterling.Īs a reference, the Pound to euro exchange rate (GBP/EUR) is quoted at 1.1703. Natixis' near-term forecast suggests a rise in the EUR/GBP to 0.87 within the next three months. In their recently published currency predictions, Natixis has projected a minor drop in the value of the Pound Sterling (GBP) compared to the Euro (EUR), while maintaining its strength against the US Dollar (USD).
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |