The British pound enjoyed a series of strong PMIs as well as weakness in US figures
Here is their view, courtesy of eFXnews:
GBP rally continues for now: Our UK economists have adjusted their BoE easing call, delaying the next tranche of QE to February 2017.
Rate differentials have moved in favour of GBP and, with the market heavily short-positioned, we see further tactical upside potential, with long GBPJPY remaining our best call.
However, tactical rallies must be differentiated from long-term trends. GBP’s long-term trend remains to the downside.
Once Article 50 is triggered, the complexity of Brexit becomes visible, reducing the UK’s growth prospects. In addition, the UK’s 7% of GDP current account deficit requires currency undervaluation to remain fundable at current UK interest rates.
—G20 USD Negative: The outcome of the G20 meeting is on the margin USD-negative, with the pledge to increase SDR issuance reducing USD’s status as a global reserve currency somewhat.
The G20 recognising limitations of monetary policy and pledging to use structural and fiscal tools increasingly instead should help EUR and CHF, where bets on future monetary easing are most emphasised.
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