LIVE MARKETS-The pound's complicated, don't sell it - yet

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THE POUND'S COMPLICATED, DON'T SELL IT - YET

Analysts' views on Britain's pound are more varied than for other top currencies, both in terms of direction of travel, and the reasons behind it.

This is anecdotal, but if you ask a number of analysts about the euro, yen, broad dollar, Swiss franc etc, they will all touch on pretty much the same themes for each currency.

But there's a greater variety of views over the outlook for the pound, as reflected in a Goldman note from late Friday, in which they say they expect sterling weakness against European currencies, but not yet, and see less downside for the pound against the dollar.

Why?

First of all, at least for euro/sterling they say there are two factors in the mix, rate differentials, as usual, but also concerns about Britain's fiscal position.

And these two point in different directions, higher British rates boost the pound, but at the same time, they hurt it, because higher long-term gilt yields mean a worsening in government finances.

And Goldman reckons the second is more important for now, and will lead to higher euro/sterling, which last week reached its highest since April's tariff volatility and before that, late 2023. EURGBP=D3

However, they think these fiscal worries will fade, as the summer should be quieter for news on UK government finances. They see more benign market for gilt issuance, and so now isn't the time to position for further sterling weakness.

That changes later in the year though, partly because they think a sterling rebound would give better levels at which to sell, and partly because rate differentials will start to matter again, and they expect more BoE rate cuts than the market.

As for cable - sterling/dollar - they think it's harder to target falls there, because of all U.S. volatility, and their expectations for a broadly weaker dollar.

(Alun John)

EARLIER ON LIVE MARKETS:

Q2 SEASON SO FAR: "FINE BUT NOT FABULOUS" CLICK HERE

MINERS AND AIRLINES UPLIFT CLICK HERE

BEFORE THE BELL: TARIFFS, EARNINGS AND ECB CLICK HERE

COULD HAVE BEEN WORSE, IS ENOUGH FOR THE YEN CLICK HERE