Synopsis:

Goldman Sachs sees potential for further gains in the British Pound, maintaining a long GBP/CHF position with a target of 1.16, driven by both positive global risk sentiment and strong domestic data.

Key Points:

• Pound Recovery: The GBP has quickly rebounded from early August losses, benefiting from improved global risk sentiment, evidenced by the currency's high beta properties. EUR/GBP has dropped below 0.85, and GBP/USD (Cable) has climbed above 1.30.

• Supportive Risk Sentiment: The positive global risk sentiment, fueled by lower yields, is aiding the GBP. This external factor is crucial for the Pound's continued strength.

• Strong Domestic Data: UK domestic data, particularly the flash PMIs, showed stronger-than-expected results, indicating that the UK’s solid growth momentum may persist, providing additional support for the GBP.

• Long GBP/CHF Position: Goldman Sachs maintains its recommendation to stay long on GBP versus CHF, targeting a move towards 1.16.

Conclusion:

Goldman Sachs remains bullish on the GBP, driven by both favorable global risk sentiment and robust domestic economic data, and continues to recommend a long GBP/CHF position with a target of 1.16.