2022 has been a difficult year for the UK. Economists at ANZ Bank expect the GBP to remain under pressure in 2023 relative to other G10 currencies.

Structural challenges

“In view of weak fundamentals in the UK, we expect the GBP to remain under pressure in 2023 relative to other G10 currencies.”

“The fundamental backdrop for the UK is filled with uncertainty. Over the short term, households will have to deal with elevated inflation, higher taxes and the increased costs of servicing debt. This will dent consumption and dampen the already subdued growth outlook. All of these are GBP negative.”

“The fiscal and political risk premium in the GBP has decreased considerably since Cable touched a low of 1.0350 in September. The GBP is unlikely to test those lows again. Considering the new government and the fiscal plan announcement, our view is that it has established a new floor at 1.15 against the USD.”