The Bank of England is convening for its first rate decision of 2020 and bond markets see it as a total coin-flip. How will the pound react?
Here is their view, courtesy of eFXdata:
Société Générale Research discusses GBP outlook and sees a scope for near-term weakness heading into this week’s BoE meeting.
“Sterling is the pivot. There’s a lot of focus on Brexit this week, although the UK will leave the EU with a whimper, at least initially. On we go to trade negotiations with both the EU and US, and speculation about whether the UK will seek an extension to the transition period. We remain bullish of sterling on a longer-term view but nervous for the months ahead. Trade headlines will be challenging, and the week’s main event is the MPC meeting this Thursday,” SocGen notes.
“Markets price a cut in H1, but are unsure after last week’s data, whether it comes this week. We think it will, and sterling could soften a little, with GBP/JPY shorts the most attractive cross, but GBP/USD also vulnerable to another move to 1.28,” SocGen adds.
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