BNP Paribas sees GBP regaining some momentum this week with the main focus remains on the July MPC minutes (Wednesday) and followed by retail sales (Thursday) and Q2 GDP (Friday).
“MPC discussions will be scrutinized for hawkish signals amid signs of diminishing slack in the economy and our economists do not rule out a split vote at the meeting. Given that there is still scope for some adjustment in expectations towards fully pricing in a 25bp rate hike by Q4 (in line with our view) a hawkish dissent would help push EURGBP back below 0.79,” BNP projects.
“Key risks for the GBP relate to stretched long positioning and the Scottish succession referendum, although the latter is still nearly two months away,” BNP warns
In line with this view, BNP remains short EUR/GBP but have trailed the stop to 0.7985 to lock in 1.9% gains.