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6 Aug 2013
Flash: BoE events for tomorrow - BMO
FXstreet.com (London) - Stephen Gallo Head of European FX Strategy for BMO said the current net short positioning in the GBP based on CFTC data alone appears to be a remnant of two things, primarily:
Key Quotes:
“…the early 2013 GBP sell-off and the embedded sterling weakness inspired by the July BoE statement alongside the concurrent slump in UK rates. With this in mind, the most likely avenue for “shock” in FX over tomorrow’s BoE event risk would appear to the upside in GBP/USD”.
“Should the BoE formally adopt Fed/ECB-style forward guidance on rates and leave market participants on a purely data-dependent path, we think its unlikely that the GBP will remain below $1.5450, given the extent of upside surprises in the recent dataflow”.
“ Absent other factors left in place by the BoE and designed to offset the likely follow-through from the latest macro economic data, either curve flattening via the front-end or curve steepening via the long-end (or some combination of the two) would tend to boost the GBP tomorrow morning. However, we think the BoE will resist anything more than a very modest degree of upside in rates [and therefore the GBP]”.
Key Quotes:
“…the early 2013 GBP sell-off and the embedded sterling weakness inspired by the July BoE statement alongside the concurrent slump in UK rates. With this in mind, the most likely avenue for “shock” in FX over tomorrow’s BoE event risk would appear to the upside in GBP/USD”.
“Should the BoE formally adopt Fed/ECB-style forward guidance on rates and leave market participants on a purely data-dependent path, we think its unlikely that the GBP will remain below $1.5450, given the extent of upside surprises in the recent dataflow”.
“ Absent other factors left in place by the BoE and designed to offset the likely follow-through from the latest macro economic data, either curve flattening via the front-end or curve steepening via the long-end (or some combination of the two) would tend to boost the GBP tomorrow morning. However, we think the BoE will resist anything more than a very modest degree of upside in rates [and therefore the GBP]”.