GBP: Short squeeze should not last – ING
|Friday's price action – particularly in GBP/USD – had all the hallmarks of a short squeeze, ING's FX analyst Chris Turner notes.
GBP/USD to be trading 1.19/20 later this year
"Short GBP/USD had been the conviction call for many at the start of the year given the UK's fiscal travails, but lower bond yields have taken the pressure off UK asset markets. And the (probably misplaced) prospect of a softer US tariff regime has now softened the dollar as well."
"However, for UK corporates short the dollar, we see GBP/USD in the 1.25/26 area as an interesting area to consider USD hedge ratios. We think there is a good case for GBP/USD to be trading 1.19/20 later this year as the Bank of England picks up the pace of its easing cycle and the chancellor may have to come back to the table with more fiscal tightening later this year."
"In terms of the UK calendar this week, Wednesday could be the most interesting. BoE Governor Andrew Bailey testifies to the Treasury Select Committee on Financial Stability. On the same day, UK Chancellor Rachel Reeves tries to shift the narrative back to the growth agenda in a speech at Oxford."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.