FXStreet reports that economists at MUFG Bank discuss GBP/USD prospects.

“The GDP data for July was weaker than expected. Service-facing services remain 6.7ppts below the pre-COVID peak. The ONS released its updated estimate for the number of people on furlough which was estimated to be between 1.4-1.8mn. The data indicates little improvement and a clear slowdown in the pace of people coming off furlough in recent months.”

“The announcement of a National Insurance Contribution increase of 1.25% for employers and employees will see the fiscal backdrop become more of a drag on growth as support measures come to an end.” 

“Governor Bailey mentioned that the new BoE guidance implied that the conditions for a rate that are now believed to be in place were necessary but not sufficient for a rate hike given the ongoing uncertainty. So we would expect limited further upside on rate hike expectations for now which could take out some of the upside momentum for the pound.”