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Jul 15 - 02:36 PM
GBP/USD - COMMENT-GBP/USD Dragged Down As Brexit, Lower Rate View Weigh
First appeared on eFXplus on Jul 15 - 12:25 PM

GBP/USD weakness is outpacing other developed market currencies as the expected election of hard-line Brexiteer Boris Johnson is set to usher in heightened potential for a no-deal Brexit on October 31.
Despite recent dovish Fed tones, which had reversed USD gains near 2019 highs, the lingering opaque trade, growth and inflation outlook has seen a muted DM reaction.
This as global central banks are expected to join the Fed in providing increasing accommodation.
This rising dovish tide has hit the pound harder than other DM's as until recently the BoE had been eyeing gradual hikes.
However, BoE chief Carney has dialed this back as Brexit uncertainties mount and UK economic data underwhelms.
For GBP/USD bulls this makes the road ahead a bit more challenging.
Fed Chief Powell’s dovish tilt boosted the pound to highs at 1.2784 in late June, but these gains were short-lived as bears took the opportunity to sell into strength.
Though IMM short positioning has risen over the past few reporting periods, increasing the chance of short-covering rallies, with little positive news on rates or Brexit, any such push may be underwhelming putting 2019 lows at 1.2409 and Jan 2017 lows sub-1.20 in sharper focus.

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary


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