We believe that GBP will strengthen to its peak in the coming months with short-term performance driven by rate expectations in anticipation of the first vote for a rate hike in August. The Budget announced this week supports this view pointing to potential upside risks to inflation in the near term so we will be watching the CPI. However, front loaded fiscal tightening indicates growth headwinds and GBP strength coming under pressure in the medium term.
USD: Still considered as Safe Haven. so trend is Bullish.
In an environment of fading risk appetite and high uncertainty due to China and Greece, we believe USD will be a relative outperformer. Oil prices are also on a downward trend, which could boost USD as well. The market has pushed back the timing of the first Fed hike significantly, creating room for upside moves if US data does surprise on the strong side. We will watch the upcoming retail sales and CPI prints.
We are constructive on USD because it continues to exhibit a positive correlation with risk-correlated assets, but it also benefits from its unparalleled liquidity during bouts of risk-off. We also think that a potential deal on Greece over the weekend will help investors re-focus on the Fed policy outlook.
inflation in Sweden and the UK will attract attention. When it comes to the GBP we see limited room for further rising rate expectations even if price developments stabilise. so, we go short cable.
so the recomendation for gbp/usd is bearish.we will waiting for technical sell and ignore buying signal for gbp/usd
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