GBP: A Buy On Dips; Changing Our BoE Call To A Nov Hike - Credit Agricole

Credit Agricole CIB FX Strategy Research argues that while ongoing Brexit-related developments driving sentiment, GBP’s predominant driver for now should be central bank rate expectations.

"Given the BoE’s more hawkish stance, expectations with respect to the central bank considering higher rates as soon as November have been rising. We changed our rate call this week, expecting the central bank to tighten monetary policy by 25bp in November.

With markets currently pricing in around 15bp, we therefore believe there is room for rate expectations to rise further, to the benefit of the currency," CACIB argues.

As such, CACIB recommends keeping a buy on dips strategy for GBP.

Source: Credit Agricole CIB Research