Wednesday, October 14, 2015

Stay short EURGBP into UK employment report - BNP Paribas

FXStreet (Bali) - BNP Paribas remains short EURGBP targeting a decline to 0.7000 ahead of the UK employment report at 9.30GMT.

Key Quotes

"The GBP has had a disappointing start to the week due to a soft CPI release but we do not think it makes sense to chase GBP lower from here."

"In contrast to consumer inflation, wages are telling a different story of building price pressures as we expect the 3m/3m ex-bonus measure of compensation to rise to 3.0% y/y, which would be the fastest pace since January 2009. We also see the unemployment rate at a new low of 5.4%."

"Despite our economists pushing back their expectation for BoE rate lift-off to May from February 2016, there is still plenty of scope for UK front rates to adjust higher in reaction to stronger data as the market does not price a full BoE hike until Q1 2017."

"STEER TM also signals that EURGBP currently appears overbought, with short-term fair value around 0.7100. Accordingly, we remain short EURGBP targeting a decline to 0.7000."
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