24 Jul 2015
GBP/USD: Upside remains constrained – ANZ
FXStreet (Mumbai) - Analysts at ANZ believe that the GBP is likely to continue to outperform on the crosses given divergent monetary policy settings. However, further upward moves in the GBP/USD appear constrained.
Key Quotes:
“The sterling has recently outperformed other major currencies after BoE policymakers signalled they were edging closer towards the commencement of the Bank’s tightening cycle.”
“Perhaps the key issue for policymakers remains the still-subdued inflationary environment and its interaction with the exchange rate.”
“In addition, on a trade weighted basis, the sterling is around its highest level since 2008, which will likely continue to exert downward pressure on inflation for some time.”
“The interrelationship between the exchange rate, financial conditions, and inflation will continue to provide a self-regulating framework for the GBP/USD.”
“However, further upward moves in the GBP/USD are likely to be constrained by additional strength in the GBP on a trade weighted basis and the implications this has for the inflationary environment and ultimately the BoE’s monetary policy settings.”
Key Quotes:
“The sterling has recently outperformed other major currencies after BoE policymakers signalled they were edging closer towards the commencement of the Bank’s tightening cycle.”
“Perhaps the key issue for policymakers remains the still-subdued inflationary environment and its interaction with the exchange rate.”
“In addition, on a trade weighted basis, the sterling is around its highest level since 2008, which will likely continue to exert downward pressure on inflation for some time.”
“The interrelationship between the exchange rate, financial conditions, and inflation will continue to provide a self-regulating framework for the GBP/USD.”
“However, further upward moves in the GBP/USD are likely to be constrained by additional strength in the GBP on a trade weighted basis and the implications this has for the inflationary environment and ultimately the BoE’s monetary policy settings.”