HSBC sees downside risks for GBP/USD on soft UK data

HSBC notes that the British pound could come under renewed pressure against the US dollar. The bank points to ongoing UK disinflation and signs of a softer labour market, which together lessen the need for the Bank of England to keep raising rates aggressively.

Even though market pricing still reflects expectations for further BoE hikes out to an extended horizon, HSBC sees this as vulnerable to a repricing. A shift in sentiment toward a less hawkish BoE path could weigh on sterling.

The call highlights GBP/USD downside as the UK economic backdrop diverges from current market assumptions.