Why is Deutsche Bank selling the pound?
Deutsche Bank FX strategist Vice President Shreyas Gopal has shifted to a bearish stance on the British pound.
The pound fell nearly 2% against a strong US dollar last week, hitting a 14-month low of $1.2200. Unlike the dip in November 2024, following the UK budget, Gopal does not see this decline as a buying opportunity. "We favor selling GBP against a basket of major currencies," Gopal stated, highlighting the euro, dollar, Swiss franc, and Japanese yen.
Gopal warns that the pound could face further downside, particularly if the Bank of England cuts rates in February—a scenario currently priced at a 65% probability.
While some market participants may view GBP/USD as oversold, the persistent selling pressure may show few signs of reversing. Key downside targets could be the 2023 low of 1.2000 and the 2022 low of 1.0382.
The pound fell nearly 2% against a strong US dollar last week, hitting a 14-month low of $1.2200. Unlike the dip in November 2024, following the UK budget, Gopal does not see this decline as a buying opportunity. "We favor selling GBP against a basket of major currencies," Gopal stated, highlighting the euro, dollar, Swiss franc, and Japanese yen.
Gopal warns that the pound could face further downside, particularly if the Bank of England cuts rates in February—a scenario currently priced at a 65% probability.
While some market participants may view GBP/USD as oversold, the persistent selling pressure may show few signs of reversing. Key downside targets could be the 2023 low of 1.2000 and the 2022 low of 1.0382.
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