Premature To Buy GBP; New Targets
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We have published new GBP forecast. We now see GBPUSD at 1.28 end Q3 16 (EURGBP 0.86), 1.33 end Q4 16 (EURGBP 0.84) and 1.37 end Q4 17 1.37 (EURGBP 0.77).
With Theresa May now set to become British Prime Minister Wednesday, the focus will quickly shift to the Bank of England, with our economists expecting a rate cut on Thursday of this week. BOE Governor Carney confirmed that he views the weaker GBP as an important adjustment mechanism in the aftermath of the vote.
Bottom line is we continue to view long GBP positions as premature and expect renewed weakness in the weeks ahead.
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