We do not expect sterling to find much – if any – support from the BoE’s “Super Thursday”. While the MPC will almost certainly remain on hold (in line with the expectations of financial markets) following stronger-than-expected growth in 3Q, it is likely to be a “dovish hold”. Indeed, given the increased prospect of a “hard” Brexit, the MPC will not want to induce any tightening of financial conditions.

Admittedly, we do not rule out some volatility also on sterling, and cable in particular, next week depending on the outcome of US presidential election. However, looking forward we stay bearish on sterling on the back of the expected deterioration of the British economy and the “hard Brexit” prospect that would further discourage investment flows from abroad. As a result, we still target 1.20 for GBP-USD and 0.93 for EUR-GBP by end-4Q16.


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