Back
10 Feb 2015
GBP/USD to consolidate above 1.50 levels in coming weeks – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, comments on the inflation and growth outlook for UK, and further forecasts GBP/USD to consolidate above 1.50 levels in the coming weeks and EUR/GBP to end the year lower at 0.73 levels.
Key Quotes
“The two hawks of the MPC gave up their preference for an immediate rate hike at last month’s policy meeting based on the risk that a low UK inflation might persist for some time.”
“That said, these members maintain that the sharp drop in inflation is being driven largely by temporary factors. This point was stressed in a recent interview with MPC member Forbes who commented that there is the potential for cheap oil to boost consumption and investment in the UK and elsewhere and that this could trigger the need for a BoE rate hike sooner than the market expectations of the middle of next year.”
“Supporting this view was firm January UK retail sales report. The 3mth/3mth rise increased by 2.3% and was the strongest growth since April 2002.”
“The sharp drop in both fuel and food prices has driven up real wages in the UK over the past two months and supported consumption.”
“As long as inflation expectations can be controlled and consumers do not choose to delay purchases in the hope of securing a lower price, the drop in energy prices should act like a tax cut and is a net positive for UK growth.”
“We expect cable to cable to consolidate at levels above 1.50 in the coming weeks and for EUR/GBP to grind lower towards 0.73 this year.”
Key Quotes
“The two hawks of the MPC gave up their preference for an immediate rate hike at last month’s policy meeting based on the risk that a low UK inflation might persist for some time.”
“That said, these members maintain that the sharp drop in inflation is being driven largely by temporary factors. This point was stressed in a recent interview with MPC member Forbes who commented that there is the potential for cheap oil to boost consumption and investment in the UK and elsewhere and that this could trigger the need for a BoE rate hike sooner than the market expectations of the middle of next year.”
“Supporting this view was firm January UK retail sales report. The 3mth/3mth rise increased by 2.3% and was the strongest growth since April 2002.”
“The sharp drop in both fuel and food prices has driven up real wages in the UK over the past two months and supported consumption.”
“As long as inflation expectations can be controlled and consumers do not choose to delay purchases in the hope of securing a lower price, the drop in energy prices should act like a tax cut and is a net positive for UK growth.”
“We expect cable to cable to consolidate at levels above 1.50 in the coming weeks and for EUR/GBP to grind lower towards 0.73 this year.”