UK will likely add downside risks to GBP this week - Barclays

FX Strategy Research Team at Barclays Capital argues that the pound faces symmetric risks after last week's sell-off in its latest outlook on GBP/USD.

Key Quotes:

"The gyrations of domestic politics in the UK will likely add downside risks to GBP this week, with the cabinet reshuffles in Westminster taking center stage.

On the other hand, however, the market reaction to the BoE's hike announcement last week seems to have neglected some of the hawkish messages of the Inflation Report and we would not be surprised to see some short-term rate re-pricing in the coming weeks, supporting GBP.

On the data front, we forecast industrial production to modestly increase in September (Friday, Barclays: 0.3% m/m, consensus: 0.3% m/m).”