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10 Dec 2015
GBP under pressure ahead of BoE – Danske Bank
FXStreet (Edinburgh) - Pernille Henneberg, Senior Analyst at Danske Bank, sees the pound under further pressure in light of a potential dovish tone from the BoE today.
Key Quotes
“In terms of Bank of England, focus will be on how the central bank weighs a low inflation outlook against a strong labour market”.
“Given the recent decline in the oil price and current poor risk environment we think that the Bank of England is likely to maintain a fairly dovish stance”.
“This could temporarily send EUR/GBP slightly higher. Moreover, it will also increase the probability that the first UK rate hike will arrive somewhat later than Q1 (February) that we currently forecast”.
“However, Bank of England rate hike expectations for the coming 12 months are already very low and strategically we still like to be long GBP”.
“EUR/GBP is already overbought according to our short-term financial model, trading 1.3% above the model’s estimate of 0.7157 and we would look to sell the cross on spikes above 0.7300”.
Key Quotes
“In terms of Bank of England, focus will be on how the central bank weighs a low inflation outlook against a strong labour market”.
“Given the recent decline in the oil price and current poor risk environment we think that the Bank of England is likely to maintain a fairly dovish stance”.
“This could temporarily send EUR/GBP slightly higher. Moreover, it will also increase the probability that the first UK rate hike will arrive somewhat later than Q1 (February) that we currently forecast”.
“However, Bank of England rate hike expectations for the coming 12 months are already very low and strategically we still like to be long GBP”.
“EUR/GBP is already overbought according to our short-term financial model, trading 1.3% above the model’s estimate of 0.7157 and we would look to sell the cross on spikes above 0.7300”.