Rabobank: Sterling Boosted by Rate Hike Expectations, But Downside Risks in the Medium Term

Expectations of further rate hikes by the Bank of England and the resilience of the UK economy continue to boost the pound, Jane Foley, senior foreign exchange strategist at Rabobank Research, said in a report on July 17.
However, concerns over the risk of a recession due to high U.K. interest rates could lead to a weakening of the pound in the medium term “as investors panic about the broader U.K. economic backdrop and trim their long sterling positions.”
Economic conditions could worsen as the BoE raises rates and lead to a weaker pound in the medium term, says Foley