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Solid UK employment data and light positioning should boost GBP – BNP Paribas

FXStreet (Delhi) – Research Team at BNP Paribas, suggest that the ongoing improvement in the UK’s labour market should support a rebound in GBP strength given current rates markets pricing (the first BoE rate hike is priced for Q4 2016).

Key Quotes

“The cautious tone from the Bank of England’s (BoE) October minutes has prompted our economists to delay their expectations of a BoE hike until May 2016. UK dataflow next week, however, is likely to be supportive for the GBP.”

“Our economists expect the August ILO unemployment rate, released on Wednesday, to fall to 5.4% from 5.5% while average weekly earnings should remain firm at 3.0%. Meanwhile, the CPI report on Tuesday is likely to show that immediate inflation pressures remain low with a paltry tick-up in the annual inflation rate to 0.1% from 0.0%.”

“In addition, BNP Paribas Positioning Analysis shows that GBP is a slight net short with a score of -8, thereby providing substantial scope for GBP longs to re-build. We remain short EURGBP targeting 0.7000 and long GBPAUD targeting 2.2500.”

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