Gajan Mahadevan, Research Analyst at Lloyds Bank, suggests that the uncertainty surrounding an EU Referendum and upcoming FOMC meeting represent ongoing risks for the UK economy.
Key Quotes
“Recent domestic uncertainty has weighed on GBP, as markets focus on the EU Referendum in June. The meeting of US monetary policy authorities (FOMC) also presents a risk to GBP/USD.
US interest rate expectations have been pushed back since the start of the year, but in recent weeks have slowly been brought forward again. US data has shown resilience, and we expect Chair Yellen to be buoyant in her comments relating to the US economy. We believe that, as long as the data continues to outperform expectations, and the outlook for the global economy remains stable, the Federal Reserve could raise interest rates, by 0.25%, in June.”
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