16 Jul 2013
Flash: GBP/USD still vulnerable to US events – RBS
FXstreet.com (New York) - According to the FX Strategy Team at RBS, “For the GBP/USD, events in the US are also key – the USD remains vulnerable to Fed tapering expectations as seen from last week’s Bernanke speech and the FOMC minutes.”
The latter implied that the Committee generally appeared more open to tapering but a further improvement in the labor market outlook is needed. The minutes also seemed to go out of the way to underscore that tapering is different than tightening. This same point has been made by Bernanke and his latest speech showed a more dovish bias than expected.
“Strategically we still expect further USD gains this year, but the market may be reluctant to re-establish positions ahead of Bernanke’s semi-annual Humphrey-Hawkins testimony on 18 July. So while we see GBP/USD trading around 1.45-1.50 this year, risks may be skewed to the upside in the near term.” The team adds.
The latter implied that the Committee generally appeared more open to tapering but a further improvement in the labor market outlook is needed. The minutes also seemed to go out of the way to underscore that tapering is different than tightening. This same point has been made by Bernanke and his latest speech showed a more dovish bias than expected.
“Strategically we still expect further USD gains this year, but the market may be reluctant to re-establish positions ahead of Bernanke’s semi-annual Humphrey-Hawkins testimony on 18 July. So while we see GBP/USD trading around 1.45-1.50 this year, risks may be skewed to the upside in the near term.” The team adds.