The pound suffered from a series of disappointing figures. Alongside rising US yields, cable plunged. What’s next? Is it all priced in?
Here is their view, courtesy of eFXdata:
BTMU Research discusses GBP/USD outlook in light of changing its BoE rate call to no hike in May.
“That change in view on the back of the GDP data is already now close to the consensus. Market probability of a rate hike has gone from 90% prior to Governor Carney’s comment to just 20% now following the GDP data.
In FX, the GBP/USD rate has now dropped from an intra-day high of 1.4377 – a drop of over 4%. A full 25bp hike is now not priced until November so we believe the market has already over-adjusted to the recent data and probable delay in tightening…
…So assuming we see economic data to back up our view that the Q1 weakness was temporary, we would expect the MPC to respond relatively quickly. So we don’t see considerable downside scope for the pound from here,” BTMU argues.
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