GBP/USD: A more stable global backdrop should allow a rebound – Westpac

The scale of the UK's support packages should offset the negative of the UK's trade balance pressures. A more stable global backdrop should also allow GBP/USD to rebound, in the opinion of economists at Westpac Institutional Bank.

Key quotes

“The UK Government raising its contingency funds to GBP266bn suggests that it is preparing for more.”

“Open-ended Fed QE, diminished USD yield support and a much less-compelling US growth advantage should weigh on USD prospects.”

“GBP/USD may be volatile but is likely to remain within a 1.20-1.25 range unless risk aversion causes another rush of USD demand.”