Gbpusd To Drop Hsbc

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Gbpusd To Drop Hsbc

Gbp/Usd To Drop Near 1.20 In 2026 - Hsbc

According to HSBC, the GBP/USD pair will decline towards the 1.20 handle. They believe that the spot will drop to 1.20 by the end of 2025 or the start of 2026.

If we look at the current situation, the US Dollar is on the retreat against the GBP. However, HSBC believes that the theme of US Dollar dominance will continue during the rest of the year.

Gbp To Weaken Against Usd

So, if the US Dollar stays strong and continues gaining against the GBP, there's no reason for the GBP/USD to touch 1.20.

HSCB also pointed out that the DXY is currently trading at -3.0% and is below the highs made during January 2025. The bank added that the retreat in the DXY is due to the rhetoric that trade tariffs will not have that much of an impact.

The bank also warned that there is a risk of complacency in the markets. Why? There is a risk that the Trump administration will take a more aggressive stance than the initial expectations.

After all, Trump's plan is hyper-focused on funding the budget deficit, and the only way to do it is to raise the revenue. Right now, one of the easiest ways to increase revenue is to impose tariffs.

HSBC added that the higher yields and the strong economic growth will also help the US currency. However, the US Dollar will remain at risk of a high budget deficit in the long term.

As for the Bank of England (BoE), HSBC believes that the central bank will maintain its cautious stance. However, the labor market in the UK continues to deteriorate.

Also, the drop in the UK core inflation will also lead to aggressive rate cuts by the BoE. So, that's also something that will be GBP negative during the next few quarters.

Overall, HSBC is of the view that GBP will struggle against the USD during the year 2025 and even 2026.

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