The risk rally is progressing slowly. Sell GBP/CAD ahead of the inflation report?
* The highlight of today’s news and data will be the UK Bank of England inflation report. Inflationary pressures are easing, the economy is weak, bank lending is soft, and the MPC is dovish. The tone will be negative for sterling; the only question is whether it is negative enough to move the market. The BOE Governor will be questioned about whether and why QE and low rates are not boosting bank lending. He will promise more accommodation and the pound will remain under mild downward pressure. EUR/GBP can move above 0.80 and for those looking for more exotic moves, GBP/SGD is a good sell, GBP/PLN has broken clearly below its 200-day moving average this week.
Click here to read the full report: FX Strategy
Societe Generale