Sterling is significantly undervalued.
While the uncertainty of Brexit remains, one thing does not:
The path of interest rates and further QE.
In my opinion:
1) The BoE is neutral, and NOT dovish.
2) Massive GBP depreciation has already led to a rise in PPI and CPI.
3) This rise in inflation, if Sterling continues to trade below 1.30, will continue.
4) This will force the BoE to raise rates and stop QE.
5) This will be massively bullish for GBP - even against USD - because GBPUSD is overstretched to the downside, and any pullback in USD will lead to massive gains in GBPUSD.
In fact, the RATE of increase in inflation in the UK is much greater than the US.
6) The market is not pricing any of this in at present, which presents us with an excellent opportunity going into 2017: long GBPUSD at spot. Will incrementally add to the trade if GBPUSD continues lower.
While the uncertainty of Brexit remains, one thing does not:
The path of interest rates and further QE.
In my opinion:
1) The BoE is neutral, and NOT dovish.
2) Massive GBP depreciation has already led to a rise in PPI and CPI.
3) This rise in inflation, if Sterling continues to trade below 1.30, will continue.
4) This will force the BoE to raise rates and stop QE.
5) This will be massively bullish for GBP - even against USD - because GBPUSD is overstretched to the downside, and any pullback in USD will lead to massive gains in GBPUSD.
In fact, the RATE of increase in inflation in the UK is much greater than the US.
6) The market is not pricing any of this in at present, which presents us with an excellent opportunity going into 2017: long GBPUSD at spot. Will incrementally add to the trade if GBPUSD continues lower.
评论:
Adding to longs at 1.212