GBP: Market Overly Optimistic On BoE; Current Situation Unsustainable


The British pound certainly climbed down from the highs. Worries about Brexit and mixed PMIs hurt Sterling. What´s next?

Here is their view, courtesy of eFXnews:

Bank of America Merrill Lynch FX Strategy Research believes that the market is now overly optimistic on the degree to which the Bank of England ‘BoE’ will hike rates in the coming months.

“From a position where the Bank of England has not hiked rates in over 10-years, the UK rates market believes that it will hike rates in quick succession over the coming months and at a quicker pace than the Fed. We find this difficult to reconcile with the mounting political headwinds and uncertainty which could weigh growth as consensus projections imply.

We therefore believe that the BoE may find it difficult to reinforce current UK rate hike expectations and consequently remain positioned for a weaker GBP headed into the end of the year.

Markets remain content to trade positive news on Brexit but ignore the negative. We continue to question the durability of this current situation and suspect that GBP will become increasingly vulnerable if Brexit news flow turns more negative,” BofAML argues.

For lots more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.

Get the 5 most predictable currency pairs

About Author

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 the 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.

Comments are closed.