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28 May 2015
GBP/USD: upside appears limited – ANZ
FXStreet (Edinburgh) - Strategists at ANZ see gains in GBP/USD as limited, while the pound could do better in the crosses.
Key Quotes
“On a TWI basis, the pound is now above its cyclical high seen in February, which prompted Governor Carney to warn that the elevated currency could reinforce the “disinflationary impulse” in the economy and delay prospective policy tightening”.
“While the next move in rates for the BoE is almost certainly up, the combination of low inflation and a growth moderating policy mix suggests that there is little prospect of a bank rate rise until H1 2016”.
“As such, the sterling’s upside against the USD looks limited and the post-election boost is unlikely to be sustained”.
“However, given the relatively solid macroeconomic backdrop for the UK economy, we still see scope for GBP to perform well on the crosses”.
Key Quotes
“On a TWI basis, the pound is now above its cyclical high seen in February, which prompted Governor Carney to warn that the elevated currency could reinforce the “disinflationary impulse” in the economy and delay prospective policy tightening”.
“While the next move in rates for the BoE is almost certainly up, the combination of low inflation and a growth moderating policy mix suggests that there is little prospect of a bank rate rise until H1 2016”.
“As such, the sterling’s upside against the USD looks limited and the post-election boost is unlikely to be sustained”.
“However, given the relatively solid macroeconomic backdrop for the UK economy, we still see scope for GBP to perform well on the crosses”.