The pound dipped under 1.30 and is trying to recover as the bears the mount against it. The team at Credit Agricole sees more room to the downside.
Here is their view, courtesy of eFXnews:
The GBP has been broadly range-bound of late, mainly on the back of stabilising central bank monetary policy expectations. Although the BoE left all options regarding lower rates as soon as this year open, improving data as for instance reflected in better than expected retail sales suggests that the central bank is in a position to wait and see for longer. This makes sense considering that conditions may turn more unstable as soon as Brexit negotiations start next year.
The GBP should remain broadly stable next week, particularly since no top tier data is scheduled to be released.
When it comes to positioning, it remains less elevated and close to levels of when the EU referendum was held. Nevertheless, should GBP lose further downside momentum it cannot be excluded that long-term shorts will be taken off?
Hence, the scope of cannot be excluded.
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