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31.08.2016, 11:59

GBP: Staying Short Cable As Long As Spot Remains Below 1.35 - RBS. How to interpret bank recommendations

"Sentiment toward UK assets has improved, helped by a range of anecdotal and high frequency data that suggest the near-term hit to the UK economy may have been less than many feared. These have centred on retail spending, tourism and manufacturing orders. The news on housing has been less positive. Mortgage approvals for house purchases were weaker last week and there are reports of reduced asking prices and weak activity. The sector is also slowing following a front loading of purchases ahead of changes to buy-to-let and stamp-duty.

We believe that the impact of the Brexit vote will be a slow-burn as a combination of weaker investment and real incomes growth on higher inflation is gradually felt. Political noise may rise on Parliament's return on September 5th. We may get more on the timing of Article 50 and priorities for fiscal policy at the Autumn Statement.

We maintain our negative bias while spot is below 1.35 and expect resistance at 1.3372".

Copyright © 2016 RBS, eFXnews™

Keep in mind that banks are big market makers so when a bank recommends a trade it may also want to attract liquidity in that particular asset. It may signal that something is going to happen with that pair and a move is about to start. Fundamental factors can be interpret in so many ways and for the most of the time fundamentals are already priced in. The only thing that count is what the chart tells you through periods of accumulation or distribution.

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