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Nov 11 - 02:55 PM

GBP/USD: NZD Reaction To RBNZ Provides A Clue Why GBP/USD May Be Heading To 1.40 - SocGen

By eFXdata  —  Nov 11 - 12:00 PM

Societie Generale maintains its view that GBP/USD could hit 1.40 by year-end on a trade deal in the coming weeks.

"The RBNZ announced that it was keeping the OCR at 0.25%, continuing with the asset purchase programme up to NZD 100bn, and introducing a Funding For Lending Programme. It's not time yet, they conclude, for negative rates and clearly, the news of a potentially game-changing vaccine becoming available in the coming months means that the chances of rates going below zero are fading away," SocGen notes. 

"The other major economy flirting with the idea of negative rates, of cousre, is the UK. 2-year sterling rates have risen relative to US ones, too, in November. And sterling, like every other major currency except for the yen, is up against the dollar too. But the elephant remains in the room, in the form of UK/EU trade talks. The Kiwi's reaction to rates not being cut again, just reinforces our belief that a trade deal could take GBP/USD to 1.40 in the coming weeks," SocGen adds. 

Source:
Société Générale Research/Market Commentary

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