GBP: Scope For A Temp Recovery Into Next Week’s BoE But Rallies An Opportunity To Sell – SEB

The pound enjoyed some hope for a softer Brexit as May takes control of negotiations. The Bank of England is the next big thing.

Here is their view, courtesy of eFXdata:

SEB Research discusses GBP outlook and trading strategy around next week’s BoE August policy meeting.

We joined the majority of pundits expecting the Bank of England (BOE) to deliver a 25bps rate hike to 0.75% on August 2…

Rate decision likely to support GBP briefly. The experience from the initial rate hikes by other central banks as well as the experience from the first BOE rate hike in November last year suggest the GBP should appreciate this week and next.

Although Brexit scare should continue to weigh on the GBP previous rate hikes by central banks suggest there should be some room for, at least, atemporary recovery of the GBP in coming days,” SEB argues.

However, given the mess in British government and the weak support of PM May’s Brexit plan a positive pre-BOE reaction in the GBP until next week’s rate decision should be seen as an opportunity to sell the currency, as there is little to suggest a positive reaction will last beyond the day of the rate announcement,” SEB advises.

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