GBP/USD: Investors to see sterling sceptically for some time yet – Commerzbank

Due to the national period of mourning the Bank of England (BoE) meeting has been postponed by a week. So more time for the FX market to digest the data publications. Economists at Commerzbank expect sterling to remain under pressure as inflation figures are set to illustrate that the BoE is not doing enough to fight inflation.

A week rich in data

“Monthly GDP was published yesterday. It was rather poor but does not provide any reason for the BoE not to tighten its monetary policy reins any further. On the contrary, the labour market data today as well as consumer price inflation tomorrow are likely to highlight the necessity of further rate hikes.”

“Prices are likely to have risen by another 10% again in August. Whether the key rate is going to be hiked to 2.25% or 2.50% real interest rates are likely to remain negative for some time yet. Against this background, investors are likely to see sterling sceptically for some time yet. We, therefore, continue to see downside risks in sterling.”