Synopsis:

ANZ provides an optimistic outlook for GBP this week, highlighting that the worst may be over for the currency's recent sell-off. They favor long GBP positions against EUR and CHF, supported by positive UK economic data and reduced sensitivity to softer CPI readings.

Key Points:

• Reduced Impact of Softer CPI:

  • The GBP's limited reaction to last week's softer UK CPI suggests that the currency has already digested the unwinding of excessive long positions.
  • With the BoE beginning its easing cycle, future signs of softer inflation may have a less significant negative impact on GBP.

• Positive Economic Indicators:

  • Improvements in the unemployment rate, alongside robust Q2 GDP and PMI surveys, point to a strong economic impulse in the UK.
  • This positive data should support GBP, especially as economic concerns in the EU come back into focus.

• Strategic Positions:

  • ANZ recommends long GBP positions against EUR and CHF in the near term, given the currency’s resilience and favorable economic backdrop.

Conclusion:

ANZ sees GBP as increasingly resilient, with a potential for appreciation, particularly against EUR and CHF. Positive economic data and a reduced impact from softer inflation are expected to support the currency in the near to medium term.