GBP Rally Shattering Short Positions

In the space of a couple of months, sterling’s post-Brexit referendum slump to 30-year lows has been followed by a rally – and some analysts think that the U.K.’s currency will continue to build its strength.

Banks including Italy’s Unicredit are closing their short positions in sterling, sending the currency up 4 percent from its August low. Economists, seeing the rash of positive data on the U.K. economy restoring confidence that a recession is not yet imminent, are rushing to upgrade some of the gloomier forecasts for the 2016-17 period.

Manufacturing, services, consumer spending and construction data within the last week all suggested that the U.K. would stave off the recession many economists warned of for a few months at least – especially after the Bank of England stepped in with a ramped-up stimulus program.. Economists at Credit Suisse hiked their forecasts for UK growth in 2017 to 0.5 percent, compared to the previous forecast that the economy would shrink by 1 percent next year, on Tuesday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza