FXStreet (Guatemala) – Analysts at TD securities explained that while the USD is likely to have its lustre restored once the Fed’s tightening cycle gets underway, the GBP is starting to look like a close second.
Key Quotes:
“Since the May election, it is the best performing major currency in the world.
With the election behind it, the GBP has gathered support from a rebound in domestic demand. Growth in the productive sectors may be a little uneven, but services activity remains robust. The UK consumer has been a key pillar of economic strength as confidence has soared in recent months.
These factors have fuelled expectations the BoE will begin its own tightening cycle soon. We expect this to commence with the release of the February 2016 Quarterly Inflation Report
We like the GBP against a range of currencies over the next few quarters. GBP has already enjoyed some resurgence, but we continue to see value in strategic long GBP allocations, but careful timing is important.
In particular, we favour continued downside in EURGBP, while we think sterling’s gains against the commodity-linked currencies of the AUD, NZD, and CAD can extend. Positioning has been a near-term concern as these trades have looked fairly crowded, but this may have diminished somewhat over the last several days. This suggests some two-way risk could continue in the immediate future, but the medium-term fundamentals are clear, in our view.”
(Market News Provided by FXstreet)