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GBP/USD uptrend may have run its course - RBS

FXStreet (Bali) - According to Greg Gibbs, FX Strategist at RBS, the GBP/USD uptrend over the last year may have run its course, adding that rebounds are now seen as short opportunities.

Key Quotes

"Sentiment for GBP/USD has become more evenly balanced ahead of key events this week, including the employment and BoE inflation reports on Wednesday, and GDP data on Friday."

"The uptrend in GBP/USD over the last year looks tired, but the pair has slid significantly over the last month to near a key support (the lows just prior to BOE Governor Carney’s Mansion House speech) and appears somewhat oversold on short-term momentum indicators."

"The market is still priced for a hike in UK rates in Q1 next year and has benefited over the last year from a perception that it would be the first G7 country to hike."

"This timing for a hike is about right in our view, but inflation indicators have fallen significantly in recent months and there is a risk that the market pushes the UK curve somewhat lower."

"With potential for US rates to continue to grind higher in the coming months, the GBP/USD uptrend over the last year may have run its course (especially considering the relatively weak UK external balance)."

"How the GBP trades this week may set the tone for the rest of the year."

"Our bias would be to wait for the dust to settle around events this week and look for a rebound before executing short GBP/USD positions."

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