GBP to fade back to 1.7000 by year end - Scotiabank

By FXstreet.com | Updated July 30, 2014 AAA

FXStreet (Guatemala) - Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank noted that GBP is strong, flirting again with its recent multi‐year highs.



Key Quotes:



The catalyst was a stronger than expected inflation print of 1.9%y/y on headline and 2.0%y/y on core (versus expectations for 1.6% on headline and 1.7% on core), which pulls forward the expectations for interest rate hikes in the UK and is likely to support a stronger GBP."



"Follow up comments by Governor Carney on Financial Stability were met with a muted FX reaction. In terms of interest rate expectations the stronger inflation print, coupled with financial stability risks in the UK are likely to offset the uneven data. We expect GBP to rally in the near‐term as the expectations for interest rates are pulled forward; however the messaging is likely to remain constant that interest rates will be slow and cautious and this should ultimate take the upside pressure off GBP and see it fade back towards 1.70 into year‐end."



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