Citi discusses GBP outlook and adopts a buy-on-dips bias in the medium-term.
"BoE member Vlieghe’s dovish comments overnight (3rd MPC member to call for more monetary stimulus), leaves sterling moderately weaker...These remarks along with that of Tenreyro puts importance on the upcoming UK PMI print January 24. If the PMI number is weak then the current pricing of 12bps of cuts in January would likely be conservative (especially from the March meeting onwards)," Citi notes.
"Sterling likely remains a “buy the dip” story notwithstanding BoE Governor Carney, Tenreyro and Vlieghe’s dovish comments. Markets are currently pricing 12bp of rate cuts for the January meeting so a 25bp rate cut within the next 2 meetings may well push sterling even lower though this would likely present a buying opportunity given the additional stimulus provided to boost UK growth at a time of lessening Brexit uncertainties," Citi adds.