UK economic data, guidance from the Bank of England (BoE) and, very importantly, direction from the Tory government and its new leadership will set the tone for the British pound. Economists at Rabobank expect further weakness for the GBP in the coming weeks.

PM Truss does have the potential to win back some investor confidence  

“The promise of higher interest rates is not a guarantee of GBP strength when the economy is facing recession. To this end, news of another bank holiday this month is not encouraging for the pound given that it is set to detract from the GDP numbers for September.”

“If Truss can find a way to piece together a solution that strengthens relations with the EU, investors could take heart. This, however, will not be easy.”

“For now, the headwinds facing the pound are still very strong. We maintain our one-month forecast of GBP/USD 1.14.”