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Pound set for modest May growth as Bailey signals no near-term hikes
TD Securities expects UK GDP growth of 0.1% month on month in May, led by services and strong retail sales, while manufacturing remains pressured by Middle East headwinds and higher input costs.
TD Securities expects the British pound to face a mixed economic backdrop, projecting UK GDP to grow 0.1% month on month in May. The forecast points to services and strong retail sales driving activity, helped by mean reversion in some components, while manufacturing and industrial output are still under pressure.
The bank’s view is also shaped by Governor Bailey’s Mansion House speech, where he emphasized inflation returning to target more slowly, weak productivity, and a focus on stability. FXStreet summarizes TD Securities’ take that Bailey offered little indication of support for near-term rate hikes.
The note also cites where the growth forecast fits against expectations, with TD Securities calling for May growth of 0.1% m/m versus a market view of 0.0% and a prior reading of minus 0.1%.
In the same market context, GBP/USD was described as holding moderate gains near 1.3400, as traders weigh the likelihood of a cautious policy stance from the Bank of England.
Latest closeGBP/USD 1.339 ▲0.0%