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6 Aug 2015
BoE’s lift-off in 2015 remains on the cards – Danske Bank
FXStreet (Edinburgh) - Morten Helt, Senior Analyst at Danske Bank, argued that the pound could remain well supported in the near term.
Key Quotes
“Markets currently price an implicit probability of roughly 30% of a 2015 UK rate hike”.
“If we are right that the MPC is moving in a more hawkish direction with a divided view on whether to raise the interest rate or not, it marks an important entry into the final stage ahead of a lift-off in interest rates”.
“We consequently see potential for a further rise in UK yields – especially in the 0-2Y segment - which should support the GBP”.
“In fact, according to our FX short-term financial models EUR/GBP already trades above the fair value estimate of 0.684”.
Key Quotes
“Markets currently price an implicit probability of roughly 30% of a 2015 UK rate hike”.
“If we are right that the MPC is moving in a more hawkish direction with a divided view on whether to raise the interest rate or not, it marks an important entry into the final stage ahead of a lift-off in interest rates”.
“We consequently see potential for a further rise in UK yields – especially in the 0-2Y segment - which should support the GBP”.
“In fact, according to our FX short-term financial models EUR/GBP already trades above the fair value estimate of 0.684”.