Societe Generale Research likes to sell GBP on further rallies.

 

"The big focus is on the FOMC (Wednesday), and then the bank of England’s MPC and the ECB, on Thursday. The market expects 50bp from the MPC and ECB, but only 50bp from the FOMC, though they are likely to talk up terminal rates, again. SG economists are with the consensus and market pricing is very confident of the Fed and ECB moves, though a little timorous about the BOE. Maybe the pound will get a (temporary) lift from a 50bp move?," SocGen notes. 

 

"Markets have done a load of work pricing in both Chinese re-opening (2023’s top 2 two currencies, CLP and AUD, are clearly beneficiaries) and the shift in central bank hawkishness (only the NOK and TRY have done worse than the USD in 2023). That means that what central bankers say, how they shape expectations and how data evolve, matter more than usual. In turn, that means any GBP rally is worth fading, and hesitation or softening of the Fed’s message will take the dollar lower," SocGen adds.