Synopsis:

Goldman Sachs has revised its forecasts for GBP/USD downwards, indicating a less optimistic outlook for Sterling in the context of the upcoming Bank of England (BoE) meeting and recent market trends.

Key Points:

• Bearish Sentiment: Recent remarks from Deputy Governor Ramsden suggesting that inflation risks are tilted to the downside have contributed to a more bearish sentiment among clients.
• Revised Forecasts: Goldman now expects GBP/USD to be at 1.24 in the short (3 months) and medium term (6 months), adjusting downwards from previous forecasts. The 12-month forecast has also been adjusted to 1.28 from 1.35.
• Pro-Cyclical Backdrop: Changes in hawkish policy repricing in markets have made the pro-cyclical backdrop less supportive for GBP, placing Sterling in a challenging position.

Conclusion:

Goldman Sachs’ updated forecasts reflect a cautious stance on GBP/USD, driven by evolving risks to inflation and recent shifts in market dynamics