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GBP/USD to reach 1.40 as too dovish rates pricing tilt risk to the upside – Credit Suisse

FXStreet reports that economists at Credit Suisse believe that the EUR/GBP and GBP/USD pairs can reach 0.87/88 and 1.40, respectively.

“Our economists anticipate the Bank of England will increase its assets purchases by a further GBP150 B at its 4 February meeting, continuing a policy of fully financing gilt issuance. If the UK is successful in muting the current covid spike and meeting its aggressive vaccination targets, it could yet emerge among the quickest countries to reach herd immunity, perhaps as soon as by the summer.  If so, the prospects for H2 2021 would look very strong, especially as house prices are already buoyant and could remain so with the right tax policy at the 3 March budget.”

“Sterling could yet end up making a push for the 0.87-0.88 EUR/GBP target range we had looked for after a Brexit trade deal with the EU, but with momentum picking up later this quarter. That would also allow for GBP/USD to push to test 1.40.”

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