FXStreet reports that economists at HSBC discuss GBP/USD prospects.

“The details of the BoE policy decision, i.e., the vote on QE and the commentary around when rate hikes might start, were somewhat more hawkish than expected and suggest some room for near-term GBP outperformance.”

“We would still temper long-term optimism on the GBP. The BoE commentary suggests neutral rates may be nearer to 1%. Contrast this with the Federal Reserve, for example, the 2024 median interest rate projection is 1.75%. This should act as an impediment to lasting GBP strength.”

“The UK faces significant and ongoing supply-side pressures regarding gas supply, labour supply, and various logistics issues. These increased costs and burdens on UK competitiveness point to long-term fair value for the GBP drifting lower over time.”