By eFXdata — Feb 14 - 03:00 PM
Credit Agricole CIB Research discusses GBP short-term fair-values.
"Despite the recent price action, however, EUR/GBP seems to still be above its fair value of 0.88. In contrast, GBP/USD is trading above its short-term fair value of 1.20 that we estimate on the basis of short-term rate spread and a proxy for risk aversion among other drivers," CACIB notes.
"This could mean that for GBP/USD in particular to recover we would need investors to start pricing in a more aggressive BoE tightening and thus boost the fair value for the pair from here. This seems very unlikely in the wake of yesterday’s BoE testimony at parliament, however," CACIB adds.
Crédit Agricole Research/Market Commentary