GBP: Guided by the uncertainties - SocGen

Kit Juckes, Research Analyst at Societe Generale, notes that the GBP/USD was trading at 1.2230 before falling into its latest air pocket yesterday, fuelled by very little more than chatter about whether Mark Carney would announce that he will not see out his full term at the Bank of England.

Key Quotes

“In the event, his testimony to the House of Lords saw him push back a little against the idea that the MPC will simply look through a currency-induced pick-up in inflation. A three tick fall in 20178-dated short sterling futures isn’t a seismic shift, but GBP/USD, though it bounced, has only recovered a little over half the fall. Down by the lift, back up by the stairs (and struggling). Sterling is vulnerable to a sharp spike slower even if relative rates and the scale of the economic hit suggest the bulk of the Brexit have been made.”