FXStreet (Delhi) – Research Team at BNP Paribas, recommended a long GBPNOK trade going into Thursday’s BoE rate decision/minutes/Inflation Report and Norges Bank policy announcement (entry 13.1350, target 13.80, stop loss 12.9415).
Key Quotes
“The BoE voting pattern is likely to remain 8-1 meaning that the key focus will be on the Inflation Report. Our economists expect the Bank to forecast inflation of around 2.1-2.2% for 2017-2018, reflecting a slight overshoot of the target. Over the past week the rates market has brought forward its timing of the first BoE rate hike to Q4 ‘16 from Q1 ’17, but there is still a disconnect between rates market pricing and our economists’ forecast for May lift-off.”
“In contrast, we think Norges bank will be forced to deliver another 25bp cut in December. Only around 10-12bp are priced in by the end of the year, implying that a dovish message from Norges Bank this week would alter those expectations and push NOK lower. In conjunction with adding positive sterling risk via long GBPNOK we have trailed the stop on our EURGBP short recommendation to 0.7145 and continue to target 0.70.”
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