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- GBP to trade at weaker levels on a sustainable basis – Commerzbank
GBP to trade at weaker levels on a sustainable basis – Commerzbank
Economists at Commerzbank wonder how much GBP recovery is justified. EUR/GBP has returned to 0.86, GBP/USD is moving back towards 1.15 – that all seems a bit much, in ther view.
How much advance credit does GBP deserve?
“The fact that chancellor Kwasi Kwarteng left the IMF meeting in Washington in a rush to return to London is likely to fuel speculation that there will at least be a significant reversal of the suicidal budget plans, that Kwarteng might even resign and that possibly even the Prime Minister might be on the way out. All that would be positive for sterling. And as such scenarios seem more likely, the British currency is appreciating. Logically and correctly.”
“Even in the extreme case of Prime Minister Liz Truss resigning, I wonder what the next Tory government would be like. What Minister Jacob Rees-Mogg had to say over the past few days does not suggest that Kwarteng and Truss are Tory’s only issue as far as GBP is concerned.”
“With its interventions on the gilt market the Bank of England has crossed the Rubicon of fiscal dominance. Its monetary policy will not be as credible as it once was in perpetuity.”
“Sterling will trade at weaker levels on a sustainable basis and the FX market should not consider the GBP crisis to be over.”
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