FXStreet (Barcelona) – Paul Robson of RBS, offers the outlook for GBP/USD and the currencies behaviour to data and events, and further maintain a short position in the pair.
Key Quotes
“Last week brought mixed news on activity but more bad news on the UK’s current account deficit. Over the past year, a large and widening deficit has been financed by Foreign Direct Investment (FDI) and net portfolio inflows. That funding could dry up ahead of the UK in/out EU Referendum, in our view.”
“We believe that GBP has already started to trade in much the same way as a currency dragged down by a significant current account deficit. Only on days when data inform on the UK interest rate debate does the currency appear to outperform, driven by relative short-term capital flows. On slower news days, the currency appears to struggle, most likely reflecting adverse long-term capital flows.”
“An underwhelming Euro area recovery, Greece exit risks and subdued global growth suggest the good days may become less common in H2:15.”
“Last week’s soft manufacturing PMI is a warning, in our view. We believe that a more robust service sector is increasingly the only thing standing in the way of GBP weakness. Adding to this is the risk that this week’s UK Budget sees a front-loading of fiscal tightening. Our preferred way of positioning for possible GBP under-performance is to short the currency against a globally stronger USD.”
(Market News Provided by FXstreet)