By eFXdata — May 12 - 10:30 AM
Societe Generale Research highlights a scope for GBP selling to accelerate further on the back of a disappointing batch of UK economic data on Wednesday.
"Tomorrow sees the release of UK Q1 GDP data. At 7 am. And not just the quarterly GDP figures but March GDP, manufacturing, industrial production construction output, services, and trade data. April BRC sales figures are out earlier in the day (just after midnight).
As we saw again yesterday, the FX market is still somewhat lacking in liquidity and if we get sterling selling, it can take the currency down further than would seem justified. We think that's a significant risk. Brexit talks aren't making enough progress, the UK's plans to reopen the economy are cautious enough to trigger downward revisions to growth forecasts and have bene met with a generally hostile press reaction," SocGen notes.
"We remain bearish of EUR/JPY but the short-term case for GBP/JPY shorts, given that UK yields have fallen more than most in relative terms this year, is pretty clear too," SocGen adds.
Société Générale Research/Market Commentary