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Jan 31 - 12:55 PM

Danske Bank: Maintains Bearish Stance and Short Exposure on GBP/USD in Spot, Aiming for 1.21

By eFXdata  —  Jan 31 - 11:00 AM

Synopsis:

Danske Bank provides insights on the British Pound (GBP), specifically regarding its performance against the US Dollar (USD).

Key Insights:

  1. GBP's Recent Performance:

    • The GBP was one of the biggest losers in recent trading sessions, indicating a weakening trend.
  2. Inflation Data Influences:

    • The BRC Shop Price Index in the UK showed a significant decline to 2.9% year-on-year in January, down from 4.3% in December. This decrease suggests easing price pressures in the UK, though caution is advised in interpreting this data.
  3. Upcoming CPI Data:

    • Consumer Price Index (CPI) data for January will be released on February 13th, with the February data available just before the Bank of England's March meeting. These figures are crucial for assessing inflation trends.
  4. GBP Outlook:

    • Danske Bank maintains a negative outlook on GBP, particularly against USD. They have a short recommendation on GBP/USD, targeting a potential decline to 1.21.

Conclusion:

Danske Bank remains bearish on GBP/USD, expecting further depreciation towards 1.21. This forecast is based on recent poor performance of GBP, as well as anticipation of upcoming CPI data, which may continue to reflect easing price pressures in the UK.

Source:
Danske Research/Market Commentary

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