Economists at Credit Suisse remain unconvinced by the BoE’s willingness to stick to a truly hawkish stance. This, therefore, limits GBP/USD gains to at best matching EUR, with 1.2500 as the new year-end target.

1.2600 should be as far as Cable can rally this year at a stretch

“We expect a 2-5-2 vote in favour of a 50 bps rate hike. We still see a terminal rate of 4.50% in mid-2023, modestly below current market pricing just below 4.70% in Sep ‘23.”

“We have stuck to a view that EUR/GBP will largely gravitate in or around a 0.8600-0.8800 range, being unconvinced by the BoE’s willingness to stick to a truly hawkish stance given ongoing growth risks. This, therefore, limits GBP/USD gains to at best matching EUR, suggesting that the 1.2600 level should be as far as Cable can rally this year at a stretch, with 1.2500 as our new year-end target.”