Credit Agricole CIB Research discusses its expectations for next week's BoE meeting.
"The GBP advanced for most of the week, mostly in tandem with the stronger EUR. The latest newsflow suggesting that the UK is close to sealing a ‘continuity’ trade deal with Japan may have helped sentiment too. From the current levels, however, upside is likely to prove limited. This is not only due to little risk for next week’s BoE monetary policy announcement yielding a hawkish surprise, but also as broadly balanced speculative positioning implies no more position squaring-related upside risks. In our view, the BoE will have to remain ready to add further stimulus as needed, especially with Brexit-related uncertainty remaining high," CACIB notes.
"While all of that is likely to remain reflected in more muted fundamentals as confirmed by labour, retail sales and inflation data in the week after, caution on the GBP is warranted in our view," CACIB adds.