Flash: GBP weakness: the next chapter - HSBC

FXstreet.com (Barcelona) - HSBC strategists believe that the Bank of England is likely to regain some of its tolerance for GBP weakness.

They feel that with no obvious or palatable “shock and awe” options to kick-start the UK economy, the new governor will probably choose a multi-faceted approach of which a helpful exchange rate may form a part. Further, in any event, they feel that the decline in GBP is likely to be orderly, with wider USD strength playing its part. They write, “The new HSBC positioning indicator already points to a stretched degree of bearishness on GBP/USD while our year-end forecast for GBP-USD of 1.45 is broadly in line with fair value PPP and other valuation measures.”