fxpulsation
Posts : 8759
Join date : 2012-01-25
 |  Subject: Gbp Short-Term Outlook  Mon Jun 11, 2012 1:20 pm | |
| Gbp Short-Term Outlook Quotes from RBC Capital Markets: -GBP spent the first half of May outperforming strongly as it benefitted from its status as a substitute for EUR at times of financial stress and political uncertainty. In late-May/earlyJune, however, this went into reverse, with EUR/GBP breaking back above 0.80, as hope began to emerge that a long-term solution for the Eurozone's problems may emerge and expectations started to build that the BoE would ease policy further, either through increased asset purchases or even lower policy rates. We expect both of these interruptions to GBP's trend outperformance to be temporary and strength on the crosses to reassert itself in the coming weeks. -On BoE policy, there is little doubt that the market is now at least partially priced for additional BoE asset purchases. In the latest Reuters survey, 57% now expect asset purchases to ultimately go beyond the current target of GBP325bn. Moreover, the forward curve in the UK is now around 50% priced for a 25bp rate cut by year-end. Our economists' central expectation is that there will be no further policy easing, but if there is, it is far more likely to come from increased gilt purchases than lower policy rates. We are not convinced the conventional wisdom that QE weakens the domestic currency holds and the repricing of conventional policy should see GBP revert to outperforming. More FOREX-news on pages InstaForex.Com  TELETRADE: Forex Managed Accounts Project  | |
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