Forex News

HSBC economists predict strong summer for GBP, but caution on reaching beyond 1.30 level

Published by
Nonhlanhla P Dube
  • According to economists at HSBC, the GBP is displaying strong cyclical momentum and is likely to continue through the summer.
  • The positive outlook for the GBP is due to both improved risk appetite and cyclical upswing, which should continue to support the currency in the months ahead.
  • However, the economists caution that weakening credit dynamics and the waning positive impact of disinflation may limit GBP/USD gains, and the currency pair may not go far beyond the 1.30 level.

Economists at HSBC have expressed a positive but cautious outlook for the GBP/USD pair, saying that the GBP is currently displaying strong cyclical momentum which is expected to continue through the summer. They believe that this momentum will support the GBP in the months ahead. However, they caution that weakening credit dynamics and the waning positive impact of disinflation could limit GBP/USD gains to around the 1.30 level.

HSBC’s economists noted that the GBP has been benefiting from both improved risk appetite and a cyclical upswing. However, they suggest that the positive impact of these factors may not be sustained in the long term. They believe that the credit dynamics in the UK are weakening, which could limit the growth potential of the economy. Additionally, the positive impact of disinflation, which has been a key driver of growth in recent years, may be starting to wane.

Despite these concerns, HSBC remains optimistic about the outlook for the GBP in the short term. They suggest that the cyclical momentum of the UK economy is likely to continue through the summer months, which should provide support for the currency. However, they also note that the UK is likely to face significant economic headwinds in the medium to long term, which could limit the potential for sustained gains in the GBP/USD pair.

Overall, HSBC’s economists see a positive but cautious outlook for the GBP/USD pair in the months ahead. While they believe that the GBP is displaying strong cyclical momentum which should continue through the summer, they also suggest that the long-term growth potential of the UK economy is limited by weakening credit dynamics and the waning impact of disinflation. As a result, they believe that GBP/USD gains are likely to be limited to around the 1.30 level.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

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Published by
Nonhlanhla P Dube
Tags: HSBC

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