GBP/USD: Credit Agricole bank advises shorting of the pair

In an analysis published today, Credit Agricole bank says that the GBP has been under pressure recently, mainly due to lower BoE rate expectations.

"The increase in uncertainty about Chinese growth and the lowering of commodity prices pushed UK investors' rate expectations downward. The BoE should therefore not be subject to short-term pressure to raise its rates.

This week, investors' attention will turn to the PMI indices. Unless activity in services improves significantly, inflation expectations should remain blocked at the expense of BoE rate expectations.

We therefore remain in favour of selling the GBP, especially against the USD. This is especially true since there is a good chance that the Fed will raise its rates before the BoE does."

For the record, Credit Agricole holds a short GBP/USD position opened at 1.5450, with a stop at 1.5850 and a target at 1.4850.