The GBP has been under pressure of late, mainly on the back of BoE Governor Carney providing a less clear message with regards to the timing of higher interest rates.
According to him lower than expected wage growth suggests more spare capacity in the labour market than thought while any decision on higher rates will depend on incoming data.
However, further improving labour market conditions should still make a case of stabilizing price developments. Hence, we remain of the view that there is more room of rising BoE rate expectations to the benefit of the GBP.
In terms of data, investors’ focus will shift to this week’s final Q1 GDP release.
Having exited our GBP/USD long position earlier this week, we wait patiently for the opportunity to reinstate.
CA