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6 Aug 2013
Flash: Is GBP/USD undervalued heading into BoE? – BMO Capital Markets
FXstreet.com (New York) - The current net short positioning in the GBP based on CFTC data alone appears to be a remnant of two things, primarily: the early 2013 GBP sell-off and the embedded GBP weakness inspired by the July BoE statement alongside the concurrent slump in UK rates, suggests Greg Anderson, Global Head of FX Strategy at BMO Capital Markets.
Key quotes
“With this in mind, the most likely avenue for shock in FX over tomorrow’s BoE event risk would appear to the upside in GBP/USD.”
“Should the BoE formally adopt Fed/ECB-style forward guidance on rates and leave market participants on a purely data-dependent path, we think its unlikely that the GBP will remain below $1.5450, given the extent of upside surprises in the recent dataflow.”
Key quotes
“With this in mind, the most likely avenue for shock in FX over tomorrow’s BoE event risk would appear to the upside in GBP/USD.”
“Should the BoE formally adopt Fed/ECB-style forward guidance on rates and leave market participants on a purely data-dependent path, we think its unlikely that the GBP will remain below $1.5450, given the extent of upside surprises in the recent dataflow.”