GBP/USD holds gains above 200-DMA – BBH

GBP/USD remains supported after yesterday’s rally, trading above its 200-day moving average, even as the DMP survey signals moderate wage growth, BBH FX analysts report.

Inflation expectations stable despite BOE easing outlook

"GBP/USD is holding on to yesterday’s solid gains and trading above its 200-DMA (1.3326)."

"The November DMP survey outcome is not a barrier to further Bank of England (BOE) rate cuts. Over the next year, firms expect annual wage growth to slow to 3.6% vs. 3.8% in October. 1-year ahead inflation expectations was unchanged at 3.4% for a fourth consecutive month and 3-year inflation expectations ticked-up 0.1pts to 3.0%."

"The swaps curve implies 66bps of easing and the policy rate to bottom between 3.25%-3.50% over the next twelve months. We expect GBP to keep underperforming on the crosses."