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2 Reasons To Stay Long Sterling – Deutsche Bank

On one hand, UK unemployment fell in August, but the drop in jobless claims was disappointing.  This is only part of the complex picture for GBP. And what’s the next direction?

Deutsche Bank gives two reasons to stay long on sterling:

Here is their view, courtesy of eFXnews:

In a note to clients today, Deutsche Bank outlines a couple of development for sterling advising of staying long GBP despite its recent decline.

First, while yesterday’s CPI number was weak UK inflation dynamics are very different from the US or Europe. Medium term expectations are stable, services inflation is well supported and lower CPI may actually be beneficial for UK growth in supporting consumption. Headline inflation also matters less for the Bank of England than other central banks.

Bank of England have ignored headline inflation chart GBP

Second, positioning has moderated yet further. The IMM report shows that the real money community is now the shortest pounds for two years, while hedge funds have continued to cut longs.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.