Credit Suisse trade of the week
Currency investors should consider selling GBP/USD this week, advises Credit Suisse in its weekly FX pick to clients.
"Rationale: GBPUSD is becoming increasingly sensitive to data again; as the sharp reaction to last week's PMIs demonstrated. Our economists now have greater conviction in their view that the UK is headed for a shallow recession, and they already expect Q2 GDP to surprise below consensus this Wednesday.
Additionally, next Thursday's August Bank of England MPC meeting is also coming onto the radar. The majority of the market expects some form of easing to be announced.
Finally, our technical analysts are also bearish GBPUSD on a one-week horizon.
The main risk to this trade would be if the Fed sounds particularly dovish this week, but we do not see strong incentives for it to do so. GBP is also less likely to outperform in G10 under such a scenario," Credit Suisse says as a rationale behind this call.
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