The British pound has been suffering the heavy hand of the BOE, despite some good news from the UK economy.
What’s next? The team at CIBC examines:
Here is their view, courtesy of eFXnews:
After its hasty retreat during the recession, GBPUSD has been one of the most stable crosses since 2009, notes CIBC World Markets.
“But it’s close to testing the bottom of its range once again. Technical analysis would suggest that a break below 1.50 could see cable fall well below that level.
However, there have been a number of attempted breaks below that level already, none of which has stuck. And we need to keep in mind why sterling has weakened—people have pushed back expectations for BoE rate hikes at the same time as bringing forward expectations for the Fed.
However, as we have previously shown, the UK labour market is probably tighter than that of the US, meaning rate hikes may be more imminent than policymakers currently think,†CIBC argues.
“We would see any break below 1.50 as a buying opportunity,†CIBC advises.
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