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6 Aug 2015
Sterling's backdrop and GBP/USD's downside risk - ANZ
FXStreet (Guatemala) - Brian Martin, analyst at ANZ explained, post the BoE today, for sterling, therefore, the backdrop is one of solid growth, low inflation and, finally, some recovery in wage inflation and productivity growth.
Key Quotes:
"Interest rates are not racing higher, not that they ever were, but the market remains sensitive to the timing of higher rates. It is possible that some profit-taking on long sterling positions may become evident over coming days and the guidance that higher inflation and interest rates will take longer to materialise should also help to slow sterling’s rise."
"However, on a cyclical basis, the UK is well placed versus many of its competitors and near term corrections in the commodity crosses - GBP/AUD, GBP/NZD and GBP/CAD – should be limited. In our opinion, GBP/USD holds the biggest downside risk near term."
Key Quotes:
"Interest rates are not racing higher, not that they ever were, but the market remains sensitive to the timing of higher rates. It is possible that some profit-taking on long sterling positions may become evident over coming days and the guidance that higher inflation and interest rates will take longer to materialise should also help to slow sterling’s rise."
"However, on a cyclical basis, the UK is well placed versus many of its competitors and near term corrections in the commodity crosses - GBP/AUD, GBP/NZD and GBP/CAD – should be limited. In our opinion, GBP/USD holds the biggest downside risk near term."