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Thomson Reuters
May 30 - 03:48 PM
GBP/USD - COMMENT-Calming Italy Tensions Help Sterling Only So Much
First appeared on eFXplus on May 30 - 02:10 PM

Cable has bounced back today with the amelioration of Italian election angst, but its anemic recovery is a sign that weak UK interest rate fundamentals will remain a hindrance to gains in the pound.
Sterling is up 0.2 percent compared to the euro's 1.06 percent rise.
With peace, seemingly, breaking out within Italian politics, the pound is likely to resume trading on the UK interest rate outlook.
The short-sterling curve shows signs of flattening, indicating weak growth and inflation, after 2019, which means further GBP weakness ahead.
BOEWATCH on Eikon indicates a 62 percent chance for a single UK rate hike by the BoE's December meeting, well below early 2018's 50 percent chance of a second UK hike by the BoE's December meeting.
Weekly cloud top support at 1.3209, just above Tuesday's 2018 low may be a mere speed bump on the way to lower 30-w Bolli support by 1.3065, just ahead of November 3's trend low by 1.3027.

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Thomson Reuters IFR Markets


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