Gbpusd Will Move Lower

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Gbpusd Will Move Lower

Gbp/Usd Will Move Lower To 1.1750 - Mufg

According to MUFG, the GBP/USD pair remains under pressure, as evidenced by its exchange rate near 1.2100. If we look back, that's a 14-month low for the GBP/USD pair.

During the next few weeks, MUFG believes that GBP/USD will eventually lose the 1.20 handle. When that happens, the next key target for the GBP/USD will be 1.1750.

Strong Us Yields To Bring Gbp Down

It seems that global developments are not favorable for the GBP. On top of that, the US yields have also moved higher and sent the US Dollar flying.

Given all of this, MUFG believes that the UK bond market will also come under pressure. In turn, this will further raise the fears about the outlook of the UK economy.

During the year 2024, the one thing that was positive for the GBP was the higher yields. However, that's has since faded away as the BoE has started to cut rates.

The bottom line is that the yields are now lower because investors are selling bonds. And if they are selling bonds, it means the investors will also start to sell the currency as well.

Amidst all of this, MUFG added that the gilts foreign holdings are now also sitting at record highs. Also, the BoE is engaged in the gilts selling as it is trying to reduce its quantitative easing program.

But, the Bank of England may get under pressure to stop this sale due to the economy or the government's pressure.

Over all, the US Dollar has the upper hand against the GBP. In that case, it makes sense to think that the MUFG target of 1.1750 is very reasonable and achievable.

However, the one key risk for this forecast is how the new president, Donald Trump, will handle the tariff issues. But in general, the Trump policies are expected to increase the inflation which will lead to stronger Dollar.

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