GBP has shown little indication of substantial squeeze risks - Westpac
Tim Riddell, Research Analyst at Westpac, suggests that UK’s housing and further activity survey data, notably Markit PMIs, will be keenly watched this week in front of July’s industrial production and trade data.
Key Quotes
“Meanwhile positioning has stabilised at extreme levels but GBP has shown little indication of substantial squeeze risks.
Bias:
Survey data began to show a more mixed profile into late August as shown with Lloyds Business Barometer slipping again after its initial relief rebound in July. Confidence and activity have not collapsed, but mortgage data, highlighted last week, is lower. Further housing and construction data should be closely watched to affirm whether medium term uncertainty starts to postpone purchases and activity. With another two weeks before the BoE meets again, the extent of their current easing will continue to weigh on any GBP rebounds.
Although GBP/USD has been remarkably stable over the past month, the failure to breach 1.3250 will leave GBP at risk of sliding once more to the post-Brexit low of 1.2800, with persistent background risk of declining towards measured targets around 1.2500.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
