RBS have today reiterated their call to sell the pound sterling against the US dollar.
David Simmonds at RBS says:
"I keep finding deeper pockets of UK optimism among clients and a reluctance to embrace the lower Cable trade in which they were much more willing participants earlier this year.
"As the antidote to creeping GBP bullishness, read Ross Walker's excellent Note UK Economy - Green shoots... or weeds? from last week. In remaining "cautiously pessimistic" Ross asserts thus:
"A flurry of better high-frequency data should not obscure entrenched macroeconomic imbalances and structural impediments. Our central scenario is for a modest pick-up in GDP growth but the defining feature of the UK economy will continue to be protracted deleveraging. Muted income growth, further fiscal consolidation, hesitant business investment and weaker external demand mean many of those green shoots will turn out to be weeds.
"So sticking with Paul Robson's short GBP/USD trade recommendation is a confident call."
9:15: The British pound sterling (Currency:GBP) is mixed today
The pound to euro exchange rate is unchanged on Friday's closing rate at 1.1817.
The pound to Australian dollar exchange rate is a quarter of a percent in the red at 1.5554.
The pound to US dollar exchange rate is 0.2 pct higher at 1.5201.
[NB: The above quotes are taken from the interbank markets - your bank will affix a discretionary spread to the retail rate they offer. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.]
9:00: Agenda for sterling this week
Lloyds Bank Research say:
"While Bernanke’s JEC testimony is the key event, closer to home its a busy week for UK data and events: CPI , PPI, retail sales, public finances and the May MPC minutes are all released.
"We, and the rest of the market, expect CPI inflation to have dipped from 2.8% to 2.6% in April, due to Budget effects and the fall in oil prices.
"The risks, however, are skewed towards a weaker reading. The other main event to watch for is any change in the voting pattern at the MPC meeting. We believe the vote to keep the APF unchanged at £375bn was unchanged at 6:3, although there is a risk that one or two dissenters, including the Governor, may have shifted camp following the more upbeat economic assessment in the latest Inflation Report."
8:50: The GBP is the consensus short
Aurelija Augulyte at Nordea Markets Research tells us on Monday morning that the British pound is facing a bearish bias this week:
"The GBP is the consensus short, it seems. And with the mini uptrend broken, the bears had the chance to raise voices again last week. We put on a GBPUSD long last Thursday, and, respecting the USD strength, consider changing/diversifying the base with e.g. SEK and CHF (my dislikes).
"The GBP net short positions have been trimmed a bit, as hoped for, but not fully yet.
"With a bit more upbeat tone in the Inflation report last week, more QE is not imminent. The macro data has been slightly better too, and there is scope for more positive surprises – potentially house prices and retail sales this week.
"That being said, the 0.8400 still remains a strong support for the EURGBP. Until it’s not, of course."