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12 Sep 2013
Flash: Long Sterling could be one of the best trades Q4 2013 - Nomura
FXstreet.com (Barcelona) - The market is in a key transition away from being heavily GBP bearish and towards a more constructive view, notes Jens Nordvig, FX Strategist at Nomura.
Key Quotes
"This shift is driven by much stronger “soft” data. We think there is significant potential, and the market has been underweight GBP, from speculative accounts to central banks. This will change if UK growth moves to above trend and BoE hikes come into play."
"We like expressing the view versus other European currencies, SEK specifically, but CHF could be an option too. We detect cyclical divergence, and this could be a theme for the next 6-9 months. The GBPs level in European crosses, still look “crisis-like” and this does not seem warranted any longer."
"In addition, we think there are stale long views in Scandinavian currencies, which are no longer helped as much by the AAA rating (matters less now than in 2012) and economic performance (deteriorating relatively)."
Key Quotes
"This shift is driven by much stronger “soft” data. We think there is significant potential, and the market has been underweight GBP, from speculative accounts to central banks. This will change if UK growth moves to above trend and BoE hikes come into play."
"We like expressing the view versus other European currencies, SEK specifically, but CHF could be an option too. We detect cyclical divergence, and this could be a theme for the next 6-9 months. The GBPs level in European crosses, still look “crisis-like” and this does not seem warranted any longer."
"In addition, we think there are stale long views in Scandinavian currencies, which are no longer helped as much by the AAA rating (matters less now than in 2012) and economic performance (deteriorating relatively)."