Credit Agricole on the pound
Credit Agricole CIB FX Strategy Research notes that GBP was under pressure by the end of the week, mainly in response to the BoE lowering investors' central bank rate expectations.
"By lowering its longer-term wage price forecasts, it was indicated that domestic conditions will stay muted for longer. This is suggesting too, that domestically driven upside risks to inflation are expected to remain muted....Nevertheless, it was explained too that rates may have to rise faster than what the market expects. In fact, it cannot be excluded that the BoE's forecast faces upside risks," CACIB adds.
"As a result we expect overall rate expectations to remain stable and such prospects should keep any currency downside limited from the current levels. This is especially true as speculative positioning is broadly balanced," CACIB argues.
Cable is down 99 pips to 1.3032 today. For bank trade ideas, check out eFX Plus.
