The sharp sell-off of the US dollar last week has subsided. Renewed gains versus GBP are certainly plausible after the Autumn Statement highlighted a macroeconomic outlook considerably worse than elsewhere, economists at MUFG Bank report.

GBP depreciation expected

“Renewed US Dollar strength seems likely as the Fed continues to push a hawkish stance as they play down the idea of an end to the monetary tightening cycle. So, more challenging market conditions still lie ahead for the Pound, against the Dollar for sure but more broadly as well.” 

“The out-performance of the Pound last week is unlikely to last. The Autumn Statement contained no surprises but did highlight the relatively poor macro backdrop that will result in renewed GBP depreciation ahead.”