3 Feb 2015
GBP to be remain supported in the near-term – BAML
FXStreet (Barcelona) - The Research Team at Bank of America-Merrill Lynch, expect GBP to remain supported in the nar-term by UK & US data, UK – US rate differentials and the steepening UK yield curve.
Key Quotes
“The BoE’s rate decision is unlikely to have an impact on GBP with no change and no statement likely.”
“A more significant event risk is expected in the coming weeks with the release of the BoE’s Quarterly Inflation Report and January CPI data.”
“Since the start of the year, the pound has been relatively sidelined as events elsewhere (ECB, SNB) dominate the markets’ thoughts. Indeed, the 9-0 vote at the January barely registered in the minds of the markets. This is, in large part, due to the markets having pared back its view on the timing of the first rate in UK well into 2016.”
“Our suite of metrics do, however, suggest that GBP sentiment should continue to receive some support. Measures such as relative UK-US data surprises, 2yr UK-US rate differentials, and the steepening of the UK yield curve all suggest some near-term support for the pound.”
“In our latest Liquid Cross Border Flows, our weekly proprietary flows also suggest that GBP is supported by real money and the official sector’s demand for the pound.”
Key Quotes
“The BoE’s rate decision is unlikely to have an impact on GBP with no change and no statement likely.”
“A more significant event risk is expected in the coming weeks with the release of the BoE’s Quarterly Inflation Report and January CPI data.”
“Since the start of the year, the pound has been relatively sidelined as events elsewhere (ECB, SNB) dominate the markets’ thoughts. Indeed, the 9-0 vote at the January barely registered in the minds of the markets. This is, in large part, due to the markets having pared back its view on the timing of the first rate in UK well into 2016.”
“Our suite of metrics do, however, suggest that GBP sentiment should continue to receive some support. Measures such as relative UK-US data surprises, 2yr UK-US rate differentials, and the steepening of the UK yield curve all suggest some near-term support for the pound.”
“In our latest Liquid Cross Border Flows, our weekly proprietary flows also suggest that GBP is supported by real money and the official sector’s demand for the pound.”