13 Nov 2013
Flash: GBP lost ground on EUR and USD on inflation miss - Danske Bank
FXstreet.com (Barcelona) - Dankse Bank analysts note that GBP lost a little territory yesterday against EUR and USD, after a surprisingly low inflation print.
Key Quotes
“With inflation on a declining path, there should be no imminent pressure on Bank of England from the inflation knock-out criteria on the 7% unemployment rate threshold in the forward guidance.”
“Hence, most important factor in terms of forward guidance remains the unemployment rate. Today, we look for a minor decline in ILO unemployment rate (in line with consensus), which viewed in isolation should be GBP positive.”
“However, most important event today for GBP will be the release of Bank of England’s November inflation report. GBP has been the best performing currency among majors during the past month as the continuing strong rebound in UK data has increased expectations that the central bank will communicate the 7% threshold to be met somewhat earlier than Q3 16, as implied from the August Inflation Report.”
“Hence, despite high expectations already priced in, we still favour being short EUR/GBP in order to position for further EUR weakness after ECB's surprise rate cut last week.”
Key Quotes
“With inflation on a declining path, there should be no imminent pressure on Bank of England from the inflation knock-out criteria on the 7% unemployment rate threshold in the forward guidance.”
“Hence, most important factor in terms of forward guidance remains the unemployment rate. Today, we look for a minor decline in ILO unemployment rate (in line with consensus), which viewed in isolation should be GBP positive.”
“However, most important event today for GBP will be the release of Bank of England’s November inflation report. GBP has been the best performing currency among majors during the past month as the continuing strong rebound in UK data has increased expectations that the central bank will communicate the 7% threshold to be met somewhat earlier than Q3 16, as implied from the August Inflation Report.”
“Hence, despite high expectations already priced in, we still favour being short EUR/GBP in order to position for further EUR weakness after ECB's surprise rate cut last week.”