The British pound did not capitalize on positive data as the BOE is set to cut rates. Here are two opinions that both point to the downside:
Here is their view, courtesy of eFXnews:
BoE To Cut In November; We Continue To Target Sub-1.30 in GBP/USD – BNPP
The Bank of England noted at their policy meeting on Thursday that a majority of members continue to anticipate further easing this year if the outlook remains broadly consistent with the August Inflation Report.
Our economics team no longer expect a further increase in QE this year but they continue to forecast a 15bp rate cut at the November meeting, which is considerably more than current market pricing.
We remain broadly bearish on the GBP accordingly targeting a break below 1.30 in Cable over the coming weeks.
Furthermore, BNP Paribas STEER signals GBP is expensive, currently hold a short GBPUSD and long EURGBP trades.
GBP/USD: Nothing To Report; ‘Happy Enough’ To Stay Short – SocGen
There’s nothing new to report on sterling. Summer data have been encouraging. The MPC will ease again if its gloomy economic outlook comes true, which is self-evident. The MPC’s stance needs to be reflected in interest rates before the pound can get more of a lift, and as long as it stands ready to ease again, big moves are unlikely. So GBP/USD is in a 1.30-1.35 range, and we are happy enough to be short.
EUR/GBP tracks rates equally faithfully, and we like being long this pair. A week with house price, public sector borrowing and CBI trends data promises little excitement, though the warning from past EU President Herman van Rompuy today that meaningful Brexit negotiations are unlikely to start until after the German elections in a year’s time just adds to my concern about the steady, if mild, corrosive effect of uncertainty on the economy, investor sentiment and the pound.
*SocGen maintains a short GBP/USD from 1.3750 targeting a move to 1.25.
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