British Pound: Budget risks threaten gains against US Dollar - Nordea
Nordea strategists note EUR/GBP has traded between 0.84 and 0.87 since late February, with recent British Pound (GBP) gains helped by external factors. They highlights diminished carry appeal as the Bank of England (BoE) holds rates at 3.75%, resilient UK growth, and a crucial Autumn Budget Bill. A November hike may support GBP, but fiscal missteps could push yields higher and weaken the Pound.
Nordea strategists have pointed out that the British pound (GBP) has shown gains against the US dollar (USD) over the past few months, with the EUR/GBP currency pair trading between 0.84 and 0.87 since late February. The recent strength in the GBP can be attributed to external factors, such as the resilient UK growth and the Bank of England (BoE) keeping interest rates at 3.75%.
However, the upcoming Autumn Budget Bill on October 28th poses a significant threat to this positive trend. The strategists warn that fiscal missteps in the budget could lead to higher yields, thereby weakening the GBP.
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