GBP: Credit Suisse says BoE should ease its dovish tone, resulting in a rise of the GBP

Credit Suisse believes that the BoE should soften its dovish tone at its policy meeting today, with an upward impact on the GBP/USD on the forex.

"We believe that the BoE will marginally reduce its dovish tone this week, which could trigger a relief rally on the GBP/USD. We find little motivation for the MPC to be more dovish than what the market already anticipates for the remainder of the year (nearly a 7-point rate cut).

Indeed, at this point the BoE might even want to avoid reinforcing the ease of market expectations. The PMC could well take advantage of recent data to provide a more balanced "wait and see" message - perhaps by showing its encouragement regarding the effects of the recent rate cut or more concern about inflation risks.

While the forex does not seem to especially anticipate a very lively or dovish meeting, positioning remains heavily short on the GBP, and the pound did not hesitate to rise in response to the positive data and the MPC guidance."

Note that Credit Suisse initiated a limit order to sell the GBP/USD at 1.3335, which is still pending.