22 Jan 2015
Time for GBP bears to take a nap - HSBC
FXStreet (Bali) - While HSBC still expects GBP/USD to finish the year lower at 1.48, they note that expectations that the first BoE hike will not come until August 2016 seems excessively dovish, which may allow the Sterling to run a recovery higher in the months to come.
Key Quotes
"The grounds for our long-running pessimism on GBP remain in play, but the market is in danger of scrambling for very more bearish forecasts when much is already in the price of GBP."
"From the cyclical perspective, there is already some sign that GBP has overshot to the downside, while expectations that the first hike will not come from the BoE until August 2016 seems excessively dovish."
"The fixation on ECB QE and the timing of the Fed’s first tightening of this cycle may prevent the UK’s twin deficits from getting traction in the FX market for now. UK politics still poses downside risks given uncertainty over the outcome and the threat of an EU in-out referendum, but this is a story confined to GBP-USD."
"GBP bears were rather late to wake from their slumber in 2014, but it perhaps time for them to take a nap. We maintain our view that GBP-USD will finish 2015 at 1.48."
Key Quotes
"The grounds for our long-running pessimism on GBP remain in play, but the market is in danger of scrambling for very more bearish forecasts when much is already in the price of GBP."
"From the cyclical perspective, there is already some sign that GBP has overshot to the downside, while expectations that the first hike will not come from the BoE until August 2016 seems excessively dovish."
"The fixation on ECB QE and the timing of the Fed’s first tightening of this cycle may prevent the UK’s twin deficits from getting traction in the FX market for now. UK politics still poses downside risks given uncertainty over the outcome and the threat of an EU in-out referendum, but this is a story confined to GBP-USD."
"GBP bears were rather late to wake from their slumber in 2014, but it perhaps time for them to take a nap. We maintain our view that GBP-USD will finish 2015 at 1.48."