GBP seen losing further ground – Danske Bank

Chief Analyst at Danske Bank Allan von Mehren sees the Sterling under further pressure in the next periods.

Key Quotes

“The pound continued to weaken sharply on Monday particularly versus the EUR”.

“IMM positioning suggests that short GBP is now in stretched territory. However, fundamentals still call for a weaker GBP given the UK’s large current account deficit”.

“Today, we have UK July inflation data which we doubt will matter much for markets. The Bank of England will see through higher inflation near-term given the downside risks to the economy”.

“Technically, a clean break of 0.87-0.8730 in EUR/GBP could see a test of 0.8770, the August 2013 high. We note the continued strength of EUR and JPY vs the USD, which reflects higher real interest rates in the eurozone and Japan relative to the US”.