Forex Flash: GBP/USD at 1.6000 is unsustainable – UBS
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GBP/USD
FXstreet.com (Barcelona) - The sterling is now hovering over the key mark at 1.6100 on Monday, buoyed by increasing optimism among traders and positive manufacturing PMI prints.
Ahead in the week the BoE will hold its monetary policy meeting, and according to M.Mohi-uddin, Managing Director of Foreign Exchange Strategy at UBS, "The BoE is likely to remain on hold following its decision last month to pause its Asset Purchase Programme at £375bn". In addition, comments by Governor M.King and MPC members Bean and Fisher have left the door open for further easing in the upcoming periods, in contrast with hawkish MPC members Weale and Broadvent.
"But with the UK Treasury's decision last month to transfer £35bn of coupon earnings from the BoE's Gilt holdings to the Budget - a form of money printing - and the risk of renewed tensions in the Eurozone likely to cause the BoE to resume asset purchases next year, we think Cable above 1.60 remains unsustainable", concluded the expert
Ahead in the week the BoE will hold its monetary policy meeting, and according to M.Mohi-uddin, Managing Director of Foreign Exchange Strategy at UBS, "The BoE is likely to remain on hold following its decision last month to pause its Asset Purchase Programme at £375bn". In addition, comments by Governor M.King and MPC members Bean and Fisher have left the door open for further easing in the upcoming periods, in contrast with hawkish MPC members Weale and Broadvent.
"But with the UK Treasury's decision last month to transfer £35bn of coupon earnings from the BoE's Gilt holdings to the Budget - a form of money printing - and the risk of renewed tensions in the Eurozone likely to cause the BoE to resume asset purchases next year, we think Cable above 1.60 remains unsustainable", concluded the expert
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