Market news
14.01.2020, 15:36

GBP sees re-evaluation – Rabobank

Jane Foley, the senior FX strategist at Rabobank, notes that the weekend comments from MPC member Vlieghe were the third set of dovish remarks from a BoE policymaker since the start of the year after those last week from Governor Carney and Tenreyro.

  • "The remarks have been followed by yesterday's releases of poor UK production figures and weaker than expected November UK GDP data which at -0.3% m/m reinforces the fact that the domestic economy is growing below trend. Insofar as CPI inflation at 1.5% y/y currently is also lower than the Bank's 2.0% inflation forecast and recent retailing surveys have been soft, the market is considering the likelihood that the January 30 MPC meeting could be bring a potential change in interest rate policy. This view has been clearly reflected in the drop in the value of GBP.
  • Having broken below the GBP/USD 1.30 level yesterday, cable dipped as far as 1.2950 this morning before pushing back to 1.30. Despite this bounce, we see risk that unless forthcoming UK economic data releases surprise to the upside, cable could soon set its sights on the post-election low close to 1.2905.
  • Since PM Johnson became PM, the market has taken a consistently more optimistic outlook on GBP on the expectations that political uncertainty in the UK would decline. CFTC speculators' data show that net positions have been positive for the past three weeks which is the longest run since the middle of 2018. That said, already GBP has given back a significant proportion of its post-election gains.
  • In view of perceived rate cut risk and given that the UK and the EU still have to hammer out their future relationship, some of this optimism could be misplaced. Given the soft economic backdrop, we maintain our view that GBP/USD could struggle to hold levels above 1.30 on a 3- to 6-month view unless solid progress is made in the UK/EU future relationship talks."

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location