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- GBP: Stay nimble through Q1 2020 before spot becomes more attractive in H2 - TD
GBP: Stay nimble through Q1 2020 before spot becomes more attractive in H2 - TD
TD Research discusses GBP outlook through next year and prefers to say mostly tactical and nimble through Q1 of next year.
"The sharp focus on UK political risks remains, but these should subside - particularly in H2 next year. There, we note a BoE rate cut is possible next year, but think this will be avoided. In any case, a cut is now fully priced into the curve. We think GBP stands to benefit modestly as these expectations are ironed out with time. Spot will remain choppy and headline driven in early 2020, but more attractive in H2. Stay nimble through Q1. With vol low and risk-reversals skewed to the downside, longer-dated GBPUSD calls may offer appealing risk/reward. Otherwise, we like to express GBP upside potential as part of a European basket with EUR & SEK," TD adds.
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