One of Credit Suisse’s most consistent views over the course of 2023 has been GBP bullishness. Economists at the bank take a fresh look at the Pound.
GBP could well become and then remain among the highest yielders in G10 space
Reaching 5.75% by December may be too slow as markets price in, and the BoE may have to resume hiking to 50 bps hikes, as it did last February. It’s also the case that GBP could well and then remain among the highest yielders in the G10 space, something that could attract carry-chasing money to the UK at a time of less global asset volatility.
We see room for the broad trade-weighted GBP to test post-2016 highs seen in early 2022 around 2% above current levels.
We lower our near-term EUR/GBP target to 0.8450 and raise our GBP/USD target to 1.2800, levels at which we would finally be tempted to take profit if reached quickly.
