Bank of America Global Research discusses GBP outlook and targets GBP/USD at 1.12 and EUR/GBP at 0.89 by the end of Q1.
"The UK asset markets have been reassured by the UK Budget and the overall approach of the new UK PM and Chancellor. Nevertheless, investors remain very skeptical toward the UK economy’s prospects and GBP as a result," BofA notes.
"To a large extent, we understand: our economists expect a recession in the UK, forecasting the largest real disposable income drop since at least the mid-1950s; and, while headline inflation has likely peaked, they expect the underlying inflation pressures to persist," BofA adds.
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