Via eFX:
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Morgan Stanley Research discusses GBP outlook and maintains a neutral bias in the near-term.
- "We turn neutral on GBP. We continue to expect GBP/USD to trend lower, driven chiefly by broad-based USD strength but, on the GBP leg, we think a lot of the bad news is now in the price. Low prospects of a near-term fiscal boost means UK growth would remain lacklustre for the rest of this year, limiting the BoE's ability to tighten materially. That said, this is not new news. The BoE was one of the first few G10 central banks to warn of the risk of a recession," MS notes.
- "Low UK growth expectations, the broader dollar and the risk backdrop remain key drivers of GBP/USD, and are all pointing to a weaker GBP. That said, this is not new news, and we think GBP could outperform some of its European peers, with EUR/GBP likely to stay weak from here," MS adds.
