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Stay short EURGBP into UK jobs report - BNP Paribas

FXStreet (Bali) - BNP Paribas recommends to stay short EURGBP into Wednesday’s UK employment report, targeting a decline to 0.70.

Key Quotes

"We expect a heavy flow of UK data this week to be supportive for the GBP. Our economists are more optimistic than the market on the prospects for an uptick in the CPI on Tuesday to 0.1% y/y at the headline and 1.2% y/y at the core rate. While consumer inflation is still clearly far off the BoE target, wages are telling a different story."

"We expect the 3m/3m ex-bonus measure of compensation in Wednesday’s labour report to rise to 3.0% y/y, which would be the fastest pace since January 2009. We also see the unemployment rate at a new low of 5.4%."

"Despite our economists pushing back their expectation for BoE rate lift-off to May from February 2016, there is still plenty of scope for UK front rates to adjust higher in reaction to stronger data as the market is currently pricing no hikes until Q1 2017."

"We remain short EURGBP accordingly, targeting a decline to 0.70. MPC member Weale speaks today and we will be watching for any indication that he is one step closer to joining McCafferty in voting for rate hikes."

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