Since there is a lot of good news already in the price, the Pound could struggle to hold its ground going forward, economists at Rabobank report.

Some support for the USD in the coming months as 2023 rate cuts are fully priced out

“In order for GBP to maintain its out-performance, UK fundamentals will have to keep on surprising to the upside. We consider this to be unlikely.” 

“It is our view that the BoE may be forced to push the economy into recession in order to push inflation back to its 2% target. This could take the wind out of GBP sails in the latter part of the year.”

“It is our view that there will be no easing in policy from the Fed until next year. We foresee some support for the USD in the coming months as 2023 rate cuts are fully priced out.”

“We see scope for GBP/USD to push back to 1.22 on a three-month view.”