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BofA: A Semblance Of Normality

GBP

Bank of America note that “a key part of our GBP narrative in 2023 has been that the pricing out of idiosyncratic risks meant that the lows in GBP were in place. However, pricing out bad news rather than pricing in much good news would also suggest that GBP rallies would be limited. Though GBP has performed well versus G10 peers, this has not been enough to challenge the post Brexit ranges.”

  • “2023 has therefore provided the clearest manifestation of the "GBP Reset": our theory that the structural headwinds to the UK economy would keep GBP confined to a lower trading range established since 2020.”
  • “The removal of UK-specific risk premium has consequently seen GBP re-establish itself to some of its traditional anchors.”
  • “Global risk sensitivity is once again a key driver for GBP. Of more significance is the return of rate sensitivity as a key variable.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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