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26 Aug 2014
GBP/USD comes with warnings to the bears- Scotiabank
FXStreet (Guatemala) - Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank noted that the GBP is flat, having traded in a tight 29-point range as the UK comes back from holidays.
Key Quotes
"There was only a minor reaction to a disappointing release of loans for house purchases; with the real focus for GBP the building and violent divergence between the UK-US 2 year yield and GBP/USD”
"The jump higher in the yield spread has come mainly from the UK side of the equation. A divergence of this magnitude is unlikely to last for an extended period."
"The options market is not pricing any renewed risk of upside GBP risk, as risk reversals continue to trade with the currency. If anything it is a warning to sterling bears that the bond market is beginning to price a different path. Today’s FT also carries the headline “WPP says profits ravaged by strong GBP”."
Key Quotes
"There was only a minor reaction to a disappointing release of loans for house purchases; with the real focus for GBP the building and violent divergence between the UK-US 2 year yield and GBP/USD”
"The jump higher in the yield spread has come mainly from the UK side of the equation. A divergence of this magnitude is unlikely to last for an extended period."
"The options market is not pricing any renewed risk of upside GBP risk, as risk reversals continue to trade with the currency. If anything it is a warning to sterling bears that the bond market is beginning to price a different path. Today’s FT also carries the headline “WPP says profits ravaged by strong GBP”."