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How low can GBP go? – Rabobank

FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank views the change in market rates softening the tone of sterling as it trades lower vs. the USD and the EUR.

Key Quotes

“The dovish sentiments expressed by Governor Carney in the Inflation report had a clear impact on market rates last week.”

“Money market rates are not now fully priced for first rate hike from the BoE until the Dec 2015/Jan 2016 period. 10 year gilt yields are also materially lower than a week ago as the market has re-priced for disinflation and a slower pace of BoE policy tightening.“

“The impact of the change in market markets rates has been clearly reflected in the position of sterling in recent sessions; the pound is lower vs. both the USD and the EUR. “

“The softer tone of sterling, if sustained, will help counter disinflationary pressures. Thus, without mentioning a level for sterling explicitly, the MPC can claim some success in the latest round of currency wars.”

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