25 Mar 2015
No new impetus for the Pound to weaken further – SG
FXStreet (Barcelona) - The Team at Societe Generale, comments on the EM and Commodity trades, and further notes that the longer-term concerns for Pound exits but BoE Deputy Governor’s hawkish stance suggests that further weakness for GBP/USD might require a fresh catalyst.
Key Quotes
“EM/commodity trades are still being stopped out. For FX line-drawers, we are at interesting levels to think about buying the dollar but the newsflow doesn't do much to support a bounce yet.”
“If the dollar rallies, equities stutter, EM falls over and commodity prices fall back from here, with no new news, it'll be a victory for 'technicals'.”
“So far this week, the only currencies that the dollar has out-performed against are the Renminbi, Argentine peso, and the pound.”
“On a positive note, the lower inflation delivers the strongest real wage growth since April 2008 - though the UK is still lagging the US where flat CPI means real average hourly wage growth has risen by 2% in the last year.”
“There is no UK data of note today and with the BOE Deputy Governor sounding marginally hawkish in an interview yesterday (still sees the next move being a rate hike, and underlying inflation isn't that low), there's no new impetus for the pound to weaken.”
“Long-term concerns remain therefore, but we'll need some fresh news to trigger a move back to the GBP/USD 1.4635 low.”
Key Quotes
“EM/commodity trades are still being stopped out. For FX line-drawers, we are at interesting levels to think about buying the dollar but the newsflow doesn't do much to support a bounce yet.”
“If the dollar rallies, equities stutter, EM falls over and commodity prices fall back from here, with no new news, it'll be a victory for 'technicals'.”
“So far this week, the only currencies that the dollar has out-performed against are the Renminbi, Argentine peso, and the pound.”
“On a positive note, the lower inflation delivers the strongest real wage growth since April 2008 - though the UK is still lagging the US where flat CPI means real average hourly wage growth has risen by 2% in the last year.”
“There is no UK data of note today and with the BOE Deputy Governor sounding marginally hawkish in an interview yesterday (still sees the next move being a rate hike, and underlying inflation isn't that low), there's no new impetus for the pound to weaken.”
“Long-term concerns remain therefore, but we'll need some fresh news to trigger a move back to the GBP/USD 1.4635 low.”