23 Feb 2015
Stay long GBP on solid UK data, BoE - Credit Agricole
FXStreet (Bali) - The FX Strategy Team at Credit Agricole continues to favour long positions on the British Pound, on the basis of solid UK data and a more hawkish BoE.
Key Quotes
"We continue to characterise GBP as an ‘unlikely safe haven’ benefiting from Eurozone concerns. Beyond this primary risk aversion driver, however, solid UK data and a more positive policy message from the BoE have benefitted GBP."
"Led by small business, improving earnings are providing a more positive (though still largely service sector dependent) UK economic outlook when contrasted against ongoing problems in the Eurozone."
"Such data are clearly behind the BoE message to markets to ‘look through’ the energy led inflation decline and instead focus on the bank’s medium-term price target (supported by latest data showing a further split between core and headline inflation)."
"Further ahead these GBP positive influences could be subverted by perceived UK political risks heading into the May general election. We say ‘could’ because recent polls hint that some of those fears surrounding UK election uncertainty may have been overplayed in the media during Q414. Of course things can change quickly in politics, but such evidence suggests we maintain our short EUR/GBP position for now."
Key Quotes
"We continue to characterise GBP as an ‘unlikely safe haven’ benefiting from Eurozone concerns. Beyond this primary risk aversion driver, however, solid UK data and a more positive policy message from the BoE have benefitted GBP."
"Led by small business, improving earnings are providing a more positive (though still largely service sector dependent) UK economic outlook when contrasted against ongoing problems in the Eurozone."
"Such data are clearly behind the BoE message to markets to ‘look through’ the energy led inflation decline and instead focus on the bank’s medium-term price target (supported by latest data showing a further split between core and headline inflation)."
"Further ahead these GBP positive influences could be subverted by perceived UK political risks heading into the May general election. We say ‘could’ because recent polls hint that some of those fears surrounding UK election uncertainty may have been overplayed in the media during Q414. Of course things can change quickly in politics, but such evidence suggests we maintain our short EUR/GBP position for now."