UPDATE: 'We were wrong' -- HSBC reverses bearish pound view after BOE rate hints
By Sara Sjolin, MarketWatch
HSBC strategists 'admit defeat' after latest pound rally
"We were wrong."
That's the unusually honest conclusion from HSBC's currency strategist after the Bank of England last week hinted interest rates could rise in "coming months," which sparked a 3% rally in the pound .
"The Bank of England's unexpected hunger to join other G-10 central banks in the race to the exit from accommodative monetary policy has given additional impetus to GBP, a currency that has happily ignored the political intrigue of Brexit throughout 2017," the bank's strategists led by global head of FX strategy David Bloom said in a note on Monday.
"We admit defeat for 2017 and revise our year-end target to 1.35 for GBP-USD and 0.89 for EUR-GBP," they added.
Before the hawkish BOE comments, the U.K.-based bank predicted sterling to trade around $1.20 at year's end and reach parity with the euro for the first time ever. That made HSBC one of the most downbeat banks in forecasting the near-term future for the U.K. currency.
Their bearish view was based on an expectation that 2017 would stand out as a year marked by stalling Brexit negotiations and political turmoil. So far, that has largely been the case, with relations between London and Brussels souring and U.K. Prime Minister Theresa May struggling to keep her party united in its Brexit approach.