The outlook for sterling (GBP) has soured, reflecting a significant deterioration in practically every single UK macroeconomic variable. UK inflation prints have continued to rise and are expected to hit levels of 10 per cent year on year by the third quarter. There are continued short-term upside risks for inflation (as I explain below). The cost of living crisis will weigh on consumption, which will constrain wider activity over the coming months. The slowing growth profile may prevent the Bank of England (BoE) from raising rates in line with its forecasts, meaning that GBP will be vulnerable to an extended…

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