13 Jul 2015
Positioning for GBP outperformance – Nomura
FXStreet (Mumbai) - The global FX Strategy team at Nomura sees the last week’s weakness in the GBP as an opportunity to go long GBP against low-yielding European G10 FX. The team recommends long GBP/CHF at 1.451.
Key Quotes
“Once uncertainty surrounding Greece has abated, divergence in monetary policy among the European G10 economies should become clearer, including divergence between the UK and Switzerland.”
“In terms of global forces, the expected Fed lift-off, which will likely support global yields, will likely work negatively for CHF.”
“As a low-yielding currency, CHF depreciation pressures will likely increase as yields rise globally, which will be the most positive for GBP/CHF among the European G10 FX pair gradually.”
“Downside risk of GBP/CHF from the Greek situation should be limited, while upside room for GBP/CHF will likely be large after uncertainty on Greece disappears.”
Key Quotes
“Once uncertainty surrounding Greece has abated, divergence in monetary policy among the European G10 economies should become clearer, including divergence between the UK and Switzerland.”
“In terms of global forces, the expected Fed lift-off, which will likely support global yields, will likely work negatively for CHF.”
“As a low-yielding currency, CHF depreciation pressures will likely increase as yields rise globally, which will be the most positive for GBP/CHF among the European G10 FX pair gradually.”
“Downside risk of GBP/CHF from the Greek situation should be limited, while upside room for GBP/CHF will likely be large after uncertainty on Greece disappears.”