GBP/USD: Turning Neutral Here But Staying Structurally Bullish; Time For N-Term Consolidation - Barclays
Barclays Research discusses GBP outlook, and adopts a neutral bias around current levels, seeing the pair prone to a consolidation phase in the near-term.
"Our expectations for near-term GBP appreciation materialized after the UK and the EU reached an agreement for a 21-month transition period, while higher wage growth solidified market expectations for a May BoE rate hike.
In our assessment, the Bank is happy with current interest rate expectations following last month’s press conference. Accordingly, we have revised our BoE call and now expect a 25bp rate hike in May 2018 and February 2019 broadly in line with market pricing.
While we continue to envision some GBP appreciation over the forecast horizon, we see little impetus for further near-term sterling gains and are neutral at current levels," Barclays argues.