BoE MPC member, Ian McCafferty, wrote in an Op-Ed for the Times that if the UK economy performs in line with the initial survey signals, more easing would likely be required. McCafferty is viewed as the most hawkish member on the MPC, who voted for a rate hike back in January, and his comments will support already very dovish BoE pricing.
We remain broadly bearish on the GBP and target GBPUSD reaching 1.24 in the near-term.
Our STEER model also initiated a short GBPUSD recommendation in addition to a pre-existing long EURGBP trade, because FX markets have not responded as much as relative rates markets to the August BoE meeting and July payrolls.
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