Forex Flash: Sell GBP on the crosses – HSBC
Forex pairs in this Article »
GBP/AUD
FXstreet.com (Barcelona) - HSBC analysts are cautious to negative on GBP over the coming two weeks as medium and short term momentum remains in favour of GBP selling against both EUR and GBP.
They note that IMM dtaa generally shows that G10 positions have been trimmed over the last two weeks, whether in shorts in JPY or longs in AUD and NZD. GBP is the exception with the net long position kept firmly intact but possesses downside vulnerability.
However, they write, "Still, we do not expect to see pervasive GBP weakness (ie where EUR-GBP and GBP-USD move in opposite directions). The cosy relationship between EUR, GBP and USD is likely to be sustained for now. It will take far more onerous signs on the UK economy/rating downgrade risks to galvanise GBP bears sufficiently to break this currency triangle."
They note that the data calendar is busy but mixed. Retail sales are holding up reasonably well, but high inflation data will remind markets of the real squeeze on consumer spending. Additional QE may also feel a little distant with inflation sticky. With austerity biting in earnest in 2013 (monthly budget numbers on the 22nd), they feel that the risk for GBP is that monetary policy is no longer providing a happy offset to tighter fiscal policy.
They believe that GBP could be vulnerable to any fresh political uncertainty regarding the UK's relationship with Europe. While no official date has been set for Cameron's speech on Europe, indications suggest that it is just a few weeks away. Looking to strategy, they prefer to play GBP weakness against the EUR following the break of 0.9230, but also GBPAUD downside would also be attractive on a close below 1.5200.
They note that IMM dtaa generally shows that G10 positions have been trimmed over the last two weeks, whether in shorts in JPY or longs in AUD and NZD. GBP is the exception with the net long position kept firmly intact but possesses downside vulnerability.
However, they write, "Still, we do not expect to see pervasive GBP weakness (ie where EUR-GBP and GBP-USD move in opposite directions). The cosy relationship between EUR, GBP and USD is likely to be sustained for now. It will take far more onerous signs on the UK economy/rating downgrade risks to galvanise GBP bears sufficiently to break this currency triangle."
They note that the data calendar is busy but mixed. Retail sales are holding up reasonably well, but high inflation data will remind markets of the real squeeze on consumer spending. Additional QE may also feel a little distant with inflation sticky. With austerity biting in earnest in 2013 (monthly budget numbers on the 22nd), they feel that the risk for GBP is that monetary policy is no longer providing a happy offset to tighter fiscal policy.
They believe that GBP could be vulnerable to any fresh political uncertainty regarding the UK's relationship with Europe. While no official date has been set for Cameron's speech on Europe, indications suggest that it is just a few weeks away. Looking to strategy, they prefer to play GBP weakness against the EUR following the break of 0.9230, but also GBPAUD downside would also be attractive on a close below 1.5200.
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