Sterling: Weaker in July/August, but from where? – SocGen

Kit Juckes, Research Analyst at Scoiete Generale, suggests that sterling’s rally, and the fall in sterling’s volatility as the EU referendum vote approaches (and as bookmakers dismiss the thought of ‘Brexit’) are related. 

Key Quotes

“The market was long vol and short the pound and has been unable to hold on to either position. Hence, we have little confidence in the ability of the GBP/USD to hold below key resistance and stop-loss at 1.4780.

However, that doesn’t alter a view that with UK rates unlikely to go up for the foreseeable future inside or outside the EU, sterling is very vulnerable over the medium term.”