Measured since the middle of November the Pound is the second best performing G10 currency after the NZD. Going forward, the question is whether these gains are sustainable? Economists at Rabobank expect GBP/USD to turn back lower in 2023.

Potential for further sharp dips in Cable next year

“We expect choppy conditions in Cable and for near-term activity to be mostly guided by movement in the USD.”

“While we are not expecting to see Cable re-visit it post mini-budget low in the coming months, we do see the potential for further sharp dips in Cable next year. This assumes another wave of concerns regarding heightened energy costs for Europe looking ahead to winter 2023 which would pressure European currencies vs. the greenback.”

“We continue to view GBP as vulnerable as see strong risk that Cable will spend much of next year below 1.20.”