GBP/USD: Risks skewed to the downside – Morgan Stanley

GBP/USD has continued to trade in a very tight range for the past month, hovering around the 1.20 level.  Economists at Morgan Stanley maintain a neutral stance with a bearish tilt.

BoE to pause this week

“We stay tactically neutral on GBP but continue to see risks skewed to the downside.”

“We see the BoE remaining on the back foot, as 1) the budget was largely supply side focused, 2) private sector pay cooled a touch more than we had expected, and 3) the global backdrop now includes elevated uncertainty and financial stability concerns.”

“We now expect the BoE to be the first among its G3 peers to pause at its upcoming meeting, in contrast with the Fed and the ECB where they see a string of 25 bps hikes in the upcoming meetings.”