GBP/CNH: Lower but not collapsing – ANZ

Analysts at ANZ Bank expect modest downside in GBP/CNH as they look for bounces in the cross to accumulate CNH.

Key quotes

“While we do not expect GBP to slump again as in March, downside risk in GBP remains as Brexit uncertainty and concerns over the funding of the ‘twin deficits’ could return. While we also expect CNH to weaken, it will likely be more modest.” 

“We expect GBP/CNH to trade modestly lower in the rest of the year before rebounding in 2021.”   

“Our preference is to turn short in GBP/CNH on bounces. Modestly positive points (around 50pips per month) favour sellers of the cross. For buyers, we expect better levels to pick up the cross but a repeat of the slump seen in March is unlikely.”