Sell GBP/USD at 1.50 say Morgan Stanley
- Written by: Gary Howes
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Content provided by eFXnews.
With the British pound putting in one of it’s strongest performance in years at the start of Referendum week some analysts are already looking at where to sell the pair. Morgan Stanley write:
GBPUSD should remain bid for now, with a chance of testing levels around 1.50.
However, this pre-vote rally would provide a selling opportunity with a target of 1.35 reached under the condition of Britain staying with the EU, but struggling to consolidate its balance sheets.
Leaving swings in political uncertainties aside, sterling has become increasingly dependent on commodity price swings and the evolution of global risk appetite.
Its internal and external imbalances would leave GBP vulnerable as investors becoming more sensitive to credit risks.
The UK’s ‘triple deficit’ position suggests it building up savings.
The increasingly declining return of investment will likely make it difficult to find adequate domestic investment returns within the UK, suggesting the UK turning into a capital exporter, which would weaken GBP.
This is why a Remain vote could provide a good opportunity to sell GBP into strength.
