GBP/USD is trading at the year to date lows, especially hit by the recent BOE inflation report.
What’s next for cable? The team at Credit Agricole provides some insight:
Here is their view, courtesy of eFXnews:
Falling BoE rate expectations have been keeping the GBP under pressure of late. This is mainly due to the central bank downgrading its growth and inflation forecasts.
However, as more muted price developments are mostly driven by external factors and as the latest data indicates stabilizing wage price developments, we see little scope of more considerable currency downside from the current levels, in particular as incoming price data may surprise positively.
From that angle investors’ focus turns to next week’s October CPI release.
As a result to the above outlined conditions we advise against selling the GBP around the current levels, in particular against the CHF. As such we stay long the cross as a trade recommendation.
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