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20 Feb 2014
Flash: GBP holding up surprising well - RBS
FXStreet (Guatemala) - FXStreet (Guatemala) - RBS strategists explained that GBP held up surprisingly well in light of UK labour data and Fed minutes.
Key Quotes:
“In light of the weaker than expected UK employment report on Wednesday, lower inflation on Tuesday and the FOMC minutes revealing that the Fed faces a similar task to the BoE in re-directing their policy guidance while sticking firmly to its QE taper, the GBP has help up well, continuing to hold above its previous high in January on this pull-back”.
”Its yield advantage has slipped back to the middle of its range for the last three months, suggesting that GBP could do the same. We advise keeping a close rein on outstanding long GBP positions”.
“However, on EM crosses we expect GBP to benefit as a relative safe haven. EUR also continues to trade more as a safe haven from the troubles in Ukraine, rather than being dragged into the mire. However, there is some risk that this may change”.
Key Quotes:
“In light of the weaker than expected UK employment report on Wednesday, lower inflation on Tuesday and the FOMC minutes revealing that the Fed faces a similar task to the BoE in re-directing their policy guidance while sticking firmly to its QE taper, the GBP has help up well, continuing to hold above its previous high in January on this pull-back”.
”Its yield advantage has slipped back to the middle of its range for the last three months, suggesting that GBP could do the same. We advise keeping a close rein on outstanding long GBP positions”.
“However, on EM crosses we expect GBP to benefit as a relative safe haven. EUR also continues to trade more as a safe haven from the troubles in Ukraine, rather than being dragged into the mire. However, there is some risk that this may change”.