Sterling has fallen more than 9% against the U.S. dollar so far this year and despite a recent reprieve, currency strategists see further pain ahead.
"But our client conversations and positioning metrics suggest this is a popular view — sentiment on Sterling is quite negative, and it trades like it's well positioned," Goldman strategists Zach Pandl and Kamakshya Trivedi said.
BNP Paribas holds a long position on the euro versus the pound, targeting £0.89. The euro was trading just below £0.86 on Monday.after a 0.1% shrinkage in March, the first back-to-back decline since early 2020, and the Bank of England has noted the rising risk of recession in late 2022 and early 2023.
"History tells us that sterling has a tendency to under-perform when markets are in 'risk-off' mode, so with the S&P 500 now officially in bear market territory there is a risk that sterling remains under pressure in the near term, particularly against the safe haven dollar."
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