The US dollar could start to lose ground on a three to six month perspective according to analysts at Rabobank. Still, they don’t see the GBP/USD doing much better than the 1.28 to 1.30 range in the coming months.

Key Quotes: 

“The USD remains well bid on hawkish rhetoric from the Fed. That said, since the publication of an 8.5% y/y print for US CPI inflation on April 12, a debate about whether the US has reached ‘peak inflation’ has been demanding attention. For many commentators, the expected rapid pace of Fed tightening this year risks sending the US economy into recession in 2023. In our view, the US economy is facing dual risks – the first from the Fed’s aggressive attempt to control inflation, the second from the impact of higher prices that will have particular impact on the pockets of poorer income households.”

“The question for the USD pertains to whether all the good news regarding the US economic outlook and interest rate differentials is already in the price. It is our view that the USD could start to lose ground on a 3 to 6 month horizon against a broad basket of currencies. That said, with GBP held back by gloomy UK economics and complicated politics, we see risk that cable may do no better than a GBP/USD 1.28 to 1.30 range in the coming months.”

This article was originally published by Fxstreet.com.Read the original article here.

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