GBP/USD: Downside risks for the pound on domestic macro factors – MUFG
|Analysts at MUFG Bank, see the GBP/USD with a bearish bias. They offer a trade idea of shorting the pair at 1.3080 with a target at 1.2800 and a stop loss at 1.3200.
Key Quotes:
“We see building downside risks for the pound on domestic macro factors with the markets likely to price an increasing risk of BoE monetary easing going forward. With the broader sentiment on the US dollar likely to remain favourable we see scope for cable breaking below the 1.3000 level soon.”
“The rhetoric from BoE MPC members this week provides the catalyst for increased market pricing for a cut. Weak data next week, albeit for November prior to the election, will still add to speculation of easing potentially as soon as the meeting at the end of this month. Our current view is a cut at the May meeting, but risks of a January cut could build.”
“Technically, GBP/USD also looks poor with numerous breaches above the 1.3200 level failing quickly. The political rhetoric on EU-UK trade negotiations also point to a difficult time from the very start of negotiations later this quarter. Market participants will increasingly lose faith in the view of a bounce-back in UK domestic demand that will force the BoE to ease, probably not in January but by May.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.