BofA: Sterling Break Higher Supports Long-Term Gains, Near-Term Upside Limited

Bank of America (BAC) currency strategists believe that sterling's (GBP) break higher supports the case for further long-term gains, although the speed of its recent rally leaves limited near-term upside.

Analyst View

Bank of America currency strategists noted that sterling's break above key resistance levels reinforces the bullish outlook for the British currency over the long term. However, the rapid pace of the recent rally reduces the likelihood of additional gains in the near term.

Context

This analysis comes as sterling has been performing strongly against the US dollar and other major currencies, supported by expectations of further interest rate hikes from the Bank of England and improving economic data.

What This Means for Investors

This analysis suggests that investors may need to exercise caution in short-term speculation on sterling, while focusing on long-term investment opportunities that may arise from the continuation of the upward trend.