The pound seemed set to snap a three-week streak, Friday, as information revealed traders had been just starting to unwind some of their bullish bets on growing expectations that the lender of England may soon cut rates into negative territory to support the recovery.
GBP/USD dropped 0.04percent to $1.3557, and it is on the right track to create a fall that is weekly 1st time in one month.
CFTC positioning data, released Friday, revealed that speculators trimmed their net place that is long sterling in the week ended Jan.5, by 1,000 contracts, to 4,000.
The unrelenting spread of this virus has forced fresh lockdown measures that will set the data recovery right back while the UK-EU trade deal has brought a semblance of presence for the economy.
“Harsh lockdown measures will continue for at the very least another thirty days, which will lead to a second pullback that is consecutive GDP in Q1/21,” RBC said in an email.
Faced with a slow than expected data recovery, the Bank of England will emerge among the first major banking institutions which are main cut prices this season.
“most banking institutions which are main in a holding pattern at the moment and will assess the significance of any tweaks for their asset purchase programs in 2010. However with the UK economy facing a lengthier road to recovery, we think the BoE will increase stimulus in 2010 by having a move to prices which are negative” RBC said.
“The hit to the UK economy through the lockdown that is third increase pressure on the BoE to provide additional monetary stimulus when their next conference in February,” analysts at MUFG said in a note on Thursday.
“We now anticipate the BoE to go rates into negative territory in February by reducing the policy that is key from 0.10pc to -0.15pc.” The pound seemed set to snap a three-week streak.