GBP: Investors Unlikely To Have Any Appetite To Long GBP Ahead Of Key Events – BofAML

Bank of America Merrill Lynch FX Strategy Research argues that politics, more than data, matter for GBP especially with a heavy Brexit calendar through to year-end.

"We think markets are unprepared and vol looks cheap given that major GBP moves this year have been driven by Brexit news rather than data. IMM positioning is close to neutral in GBP.

We doubt investors have any appetite to take on long positioning ahead of key events. Potential for heightened Euro-sceptic noise around the Conservative Party conference is a particular risk.

We think the political and seasonal headwinds are likely to intensify," BofAML adds.

In line with view, BofAML recommends selling GBP/USD via options into year-end.

Source: Bank of America Merrill Lynch Rates and Currencies ResearchOriginal Article