USD: To Strengthen Into Year-End; GBP: Difficult To See Further Gains N-Term – BofAML

Bank of America Merrill Lynch FX Strategy Research argues that the theme of policy divergence should remain the dominant driver in G10 FX for the rest of the year in the absence of a significant escalation of geo-political risks.

"We continue to expect the USD to strengthen into the end of the year, potentially helped by a US tax announcement. We find it difficult to see further GBP gains given the recent rally and the aggressive pricing of UK rate hikes over the coming months," argues.

BofAML also expects more central bank volatility in the coming week with central bank speakers dominating data, particularly in the US.

"Fed Chair Yellen, as well FOMC members Dudley, Bullard, Harker, Evans and George are all due to speak on monetary policy. In the UK, Governor Carney and Broadbent both speak whilst in the Euro Area, President Draghi, Council Members Praet and Couere also speak. In Canada, Governor Poloz is also due to speak," BofAML adds.

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