GBP/USD set to plummet towards 1.30 over the next months – Citibank

GBP/USD has hit the lowest levels in over ten months. Economists at Citibank expect the cable to dive towards the 1.30 level through the next months as the pound has failed to react to expectations of rate hikes from the Bank of England.

There is still a considerable risk that the UK could opt out to trigger Article 16

“We remain bearish cable as it fails to respond to the upside in increased MPC pricing and over the medium-term envisage a much weaker GBP, targeting <1.30 over the next three-six months.”

“The more immediate catalyst for a move in sterling may come from renewed Brexit tensions and the possibility of the UK triggering Article 16 at month-end. This would kick off 28 days of formal talks between the Uk and the EU, meaning any retaliation from the EU would more likely come via channels other than trade though if not resolved, would open up potential for the return of tariffs. This could trigger more volatility in the GBP.”