18 Jun 2014
GBP/USD eyes 1.7000 medium-term – Rabobank
FXStreet (Edinburgh) - Jane Foley, Senior Currency Strategist at Rabobank, expects the sterling to hit 1.70 in the medium term.
Key Quotes
“The pound was initially supported by the headline that that the committee was surprised by the relatively low probability of a 2014 rate hike priced into the markets. This is consistent with the sentiments offered by Governor Carney at the Mansion House speech last week when he suggested that rates could go up sooner than expected”.
“On the back of yesterday’s soft CPI releases, there is speculation that headline inflation could tick even lower into year end. This would make it difficult for the BoE to follow through with a rate hike. That said, the fall in the unemployment rate to levels not seen since early 2009 is evidence that spare capacity in the UK is reducing”.
“Speculation about the timing of rate hikes by the BoE and the Fed will be clear drivers for GBP/USD over the coming months. On the expectation that the BoE moves first we see risk of a move above the 1.70 in a 3 to 9 mth view. However, on a 12 mth view we see cable moving lower”.
Key Quotes
“The pound was initially supported by the headline that that the committee was surprised by the relatively low probability of a 2014 rate hike priced into the markets. This is consistent with the sentiments offered by Governor Carney at the Mansion House speech last week when he suggested that rates could go up sooner than expected”.
“On the back of yesterday’s soft CPI releases, there is speculation that headline inflation could tick even lower into year end. This would make it difficult for the BoE to follow through with a rate hike. That said, the fall in the unemployment rate to levels not seen since early 2009 is evidence that spare capacity in the UK is reducing”.
“Speculation about the timing of rate hikes by the BoE and the Fed will be clear drivers for GBP/USD over the coming months. On the expectation that the BoE moves first we see risk of a move above the 1.70 in a 3 to 9 mth view. However, on a 12 mth view we see cable moving lower”.