GBP/USD: BNP still aiming for 1.28 by end of year

"Despite yesterday's inflation figures, which were below consensus, inflation is expected to begin to suffer the effects of the GBP decline in early 2017. A rise in inflation will encourage the BoE to remain neutral. Carney also believes that the decline in the CPI is temporary.

We remain of the opinion that the GBP is currently undervalued and we expect it to hit 1.28 by the end of the year. Shorts positions should continue to be closed.

Our STEER model suggests a target of 1.2924." says the BNP bank.