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Forex Flash: GBP/USD remains a sell on rallies – Rabobank

The sterling is navigating weekly highs in the area of 1.4950/60 after buying interest lifted the pound from yesterday’s multi-year lows in the vicinity of 1.4830

According to Jane Foley, Strategist at Rabobank, the UK Budget due next week has grown in relevance as Chancellor Osbourne could announce a change in the BoE’s remit, allowing more QE despite the higher inflation. Coupled with yesterday’s lacklustre data from the industrial sector would pose further downside risks for the sterling.

“That said, while there is a lot of bad news with respect to the economy priced into the pound it is not clear if the market has fully prepared for a potential era of more aggressive policy easing. We continue to favour a policy of selling sterling on rallies”, Foley concluded.

Forex Flash: Is the UK in a triple-dip recession? – Deutsche Bank

One of the main talking points yesterday was a disappointing UK industrial production print. Industrial and Manufacturing Production in the UK fell -1.2% and -1.5%, respectively in January – this fell short of broadly flat expectation. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “The initial reading is due on the 25th April) and is of the view that the output contraction in Q412 and a high margin of error around his Q113 forecast have raised the prospect of a triple-dip in the UK (i.e. 2008-09, 2011-12 and 2012-13).”
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Fundamental Morning Wrap: GBP extends run as fundamental outlier

Sterling is the flavour of the moment once again, with this mornings institutional research keeping a primary focus on the woes of the UK economy and GBP´s. Elsewhere, Italian and Cypriot developments are ongoing, as is budget negotiations in the US.
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