GBP: Remain bearish and GBPUSD can target 1.24 by end-Q3 - BNPP

Sam Lynton-Brown, Research Analyst at BNP Paribas, suggests that the BNP Paribas STEER™ highlights that the market reaction to the August Bank of England (BoE) meeting and July’s US payroll print has been too muted in FX relative to interest rates and equities.

Key Quotes

“The model signals that the short-term fair value for GBPUSD currently stands at 1.2776. We would expect the GBP’s sensitivity to domestic data to be quite muted as the BoE have already signalled they expect to cut rates further to 10bp by year-end (consistent with our economists’ view) and the market is already pricing this in. EURGBP is already trading at our 0.86 end-Q3 target but an overshoot of this level in the near-term looks likely. We continue to target 1.24 in GBPUSD end-Q3.”