20 Jan 2014
Flash: GBP/USD will take its cue from rate spreads. – RBS
FXstreet.com (Guatemala) - RBS strategists at RBS said GBP/USD will take its cue from rate spreads.
Key Quotes:
“The follow-through from the initial post-payrolls squeeze in US rates markets has been a little disappointing, so we may have already established the conditions for another back-up in yields. This may see a somewhat stronger USD”.
“The Euro area recovery is tepid at best. With CPI inflation set to remain consistently below 1% over a prolonged period given a combination of a strong exchange rate, weak commodity prices and sluggish wage growth, it's important that the recovery continues to build”.
“This week sees the flash estimates of Euro area PMI for January. We'll be particularly watching the spread between France and Germany, given the apparent need for the competitiveness gap between the region's largest economies to close. The same is true for Italy”.
“This is where the risks to the EUR, both through easier ECB monetary policy and political push-back on additional economic and fiscal reforms, ultimately lie. On balance, we see EUR/GBP trading lower this week”.
Key Quotes:
“The follow-through from the initial post-payrolls squeeze in US rates markets has been a little disappointing, so we may have already established the conditions for another back-up in yields. This may see a somewhat stronger USD”.
“The Euro area recovery is tepid at best. With CPI inflation set to remain consistently below 1% over a prolonged period given a combination of a strong exchange rate, weak commodity prices and sluggish wage growth, it's important that the recovery continues to build”.
“This week sees the flash estimates of Euro area PMI for January. We'll be particularly watching the spread between France and Germany, given the apparent need for the competitiveness gap between the region's largest economies to close. The same is true for Italy”.
“This is where the risks to the EUR, both through easier ECB monetary policy and political push-back on additional economic and fiscal reforms, ultimately lie. On balance, we see EUR/GBP trading lower this week”.