GBP Gains in Cable, EUR/GBP Remains Sideways
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GBP: Cable up, EUR/GBP sideways
We are seeing a lot of correlation in short-dated yields around the world, where yesterday's soft US CPI data saw 22bp taken out of the Bank of England tightening cycle for early next year. The main takeaway from yesterday's Bank of England financial stability and subsequent communication appeared to be that consumers and businesses could withstand higher interest rates - were they to materialise. In addition, today's release of May UK GDP data has emerged marginally better than expected.
In some ways, sterling has already enjoyed its re-rating on the very hawkish BoE and thus may not outperform in this current dollar bear phase. However, many investors will now be targeting a move to 1.3300 in GBP/USD - assuming we can close the week above 1.30.
EUR/GBP has reversed off a low near 0.8500 - which now may mark the lower end of the trading range for this quarter
