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19 Aug 2013
Flash: GBP/USD remains cautious in near-term – UBS
FXstreet.com (New York) - Mohi-uddin, Mansoor at UBS analyzes the domestic stimuli of the GBP/USD and the outlook in the short-term.
Key quotes
“We remain cautious on GBP/USD. First, the strength of recent positive data surprises in the UK is unlikely to keep beating expectations. In contrast, a firm August payrolls report in the US will harden expectations the Fed will start tapering its own asset purchases.”
Moreover, “The majority of MPC members are worried that the current tightening in UK market conditions may smother the economic recovery. That may prompt officials to start talking down the pound or vote to re-start the BoE Asset Purchase Program.”
“Moving forward, even if the unemployment rate does fall towards the new 7.0% threshold faster than the BoE currently forecasts, Carney has said it will not automatically 'trigger' interest rate hikes.”
“We think investors should remain cautious on sterling. If the BoE's forward guidance endures for longer than the markets currently expect, the GBP will slide again particularly against the USD.”
Key quotes
“We remain cautious on GBP/USD. First, the strength of recent positive data surprises in the UK is unlikely to keep beating expectations. In contrast, a firm August payrolls report in the US will harden expectations the Fed will start tapering its own asset purchases.”
Moreover, “The majority of MPC members are worried that the current tightening in UK market conditions may smother the economic recovery. That may prompt officials to start talking down the pound or vote to re-start the BoE Asset Purchase Program.”
“Moving forward, even if the unemployment rate does fall towards the new 7.0% threshold faster than the BoE currently forecasts, Carney has said it will not automatically 'trigger' interest rate hikes.”
“We think investors should remain cautious on sterling. If the BoE's forward guidance endures for longer than the markets currently expect, the GBP will slide again particularly against the USD.”