28 Apr 2015
GBP/USD: Recent rise due to cyclical factors - HSBC
FXStreet (Bali) - The recent rise in GBP-USD has been due to cyclical factors, notes David Bloom and Daragh Maher, Strategists at HSBC Bank.
Key Quotes
"The recent rise in GBP against the USD has been the result of cyclical factors rather than the upcoming General Election in the UK. There had been a divergence between GBP-USD and the interest rate differential between the UK and the US. However, the very recent rise in GBP-USD has been due to the interest rate differential rather than a reduction in political risk."
"There has been a dislocation due to the election discount. However, after the opening up of this discount, the currency now seems to be trading on the interest rate differential again. The interest rate differential explains the very recent rise in GBP-USD. For the moment, GBP-USD’s discount of seven big figures is stable and the cyclicality of the US vs the UK is driving the currency."
"The recent cyclical move up in GBP-USD can be explained by the rate expectations in the UK. UK rate expectations have been rising, particularly since the release of the BoE minutes on 22 April. In contrast, since the start of April, the US rate expectations have been moving in the opposite direction given the recent US data disappointments."
Key Quotes
"The recent rise in GBP against the USD has been the result of cyclical factors rather than the upcoming General Election in the UK. There had been a divergence between GBP-USD and the interest rate differential between the UK and the US. However, the very recent rise in GBP-USD has been due to the interest rate differential rather than a reduction in political risk."
"There has been a dislocation due to the election discount. However, after the opening up of this discount, the currency now seems to be trading on the interest rate differential again. The interest rate differential explains the very recent rise in GBP-USD. For the moment, GBP-USD’s discount of seven big figures is stable and the cyclicality of the US vs the UK is driving the currency."
"The recent cyclical move up in GBP-USD can be explained by the rate expectations in the UK. UK rate expectations have been rising, particularly since the release of the BoE minutes on 22 April. In contrast, since the start of April, the US rate expectations have been moving in the opposite direction given the recent US data disappointments."