23 Jul 2014
GBP/USD making fresh lows - Scotiabank
FXStreet (Guatemala) - Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank notes that GBP is soft, having broken through support and now trading to a July low.
Key Quotes:
“Support from here lies first at the psychological 1.7000 followed by the June 25th low of 1.6953."
"The BoE minutes were the core focus, interpreted as less hawkish than expected by markets but still supporting our core view that the BoE is eager to enter its hiking cycle but that rate increases will prove gradual. Some of the takeaways include:
1) a 9-0 unanimous vote;
2) the risk of a Bank Rate hike derailing the economy was receding as the expansion was more established;
3) the path of rate hikes is likely to be gradual;
4) sustained economic momentum was looking more assured;
5) the lack of wage growth remains a core focus of the BoE and adds to uncertainty on the outlook;
6) the Bank Rate’s path is highly dependent on developing economic conditions;
7) given persistent headwinds stemming from the financial crisis, the Bank Rate would ultimate remain below its historical level for some time."
"The market reaction (of GBP weakness) highlights how much good news is already priced into GBP and one of the major risk factors for the currency. We hold a Q314 forecast of 1.72 and a Q414 target of 1.70."
Key Quotes:
“Support from here lies first at the psychological 1.7000 followed by the June 25th low of 1.6953."
"The BoE minutes were the core focus, interpreted as less hawkish than expected by markets but still supporting our core view that the BoE is eager to enter its hiking cycle but that rate increases will prove gradual. Some of the takeaways include:
1) a 9-0 unanimous vote;
2) the risk of a Bank Rate hike derailing the economy was receding as the expansion was more established;
3) the path of rate hikes is likely to be gradual;
4) sustained economic momentum was looking more assured;
5) the lack of wage growth remains a core focus of the BoE and adds to uncertainty on the outlook;
6) the Bank Rate’s path is highly dependent on developing economic conditions;
7) given persistent headwinds stemming from the financial crisis, the Bank Rate would ultimate remain below its historical level for some time."
"The market reaction (of GBP weakness) highlights how much good news is already priced into GBP and one of the major risk factors for the currency. We hold a Q314 forecast of 1.72 and a Q414 target of 1.70."