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Modest GBP decline continues - BTMU

FXStreet (Łódź) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ observes that the pound continues falling with EUR/GBP climbing again above the 0.7900 level.

Key Quotes

"The pound continues to weaken modestly in the near-term with EUR/GBP rising back above the 0.7900-level. The ongoing push back of BoE rate hike expectations is weighing on the pound."

"The implied yield on the December 2015 Short Sterling futures contract has fallen by a further 0.30 point so far in October extending its cumulative decline since early July to almost 0.75 point to 1.15%. The aggressive scaling back of BoE rate hike expectations with the first rate hike now not expected until the summer of next year has undermined a key pillar of support for the pound in the near-term."

"In comments made yesterday BoE Governor Carney displayed a slightly more dovish stance highlighting that the MPC will have to take in to account 'a more modest global recovery, particularly if that’s the case in Europe' and 'a benign global inflationary environment'. Still as the economic recovery in the UK has been mainly domestic driven it is unlikely that the BoE will overemphasize more negative external factors."

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