© Miles Eakers
|
I do think that hiking interest rates can be done much sooner than expected; as I believe the market is susceptible to any sort of tightening from any central banks. Essentially, the UK housing market is showing some signs of growth; however, any tightening too soon would do more damage than leaving one for a little bit longer and I assume central bank members are aware of that.
The British Pound recently appreciated, becoming the best performer among 10 developed-nation currencies. However, there are expectations that tensions in Syria will create a demand for the currencies of commodities-exporting nations. Do you agree with this fact and should we expect the Sterling to depreciate any time soon?
Indeed, the Sterling is currently overvalued against the commodity currencies rather than the commodity currencies are going to strengthen on the back of Syrian escalation. I expect greater demand for safe haven currencies such as the Swiss Franc and Japanese Yen. I believe that the Sterling as well is likely to weaken against the Dollar in the coming months. Thus, in my view, the best trade set-up would be to sell the GBP/JPY currency pair.
What other events can affect performance of the Sterling?
I would watch German federal election closely, which will be held on 22 September. It is obviously going to cause a lot of volatility in the markets. Moreover, the Syrian escalation is obviously going to increase geopolitical tensions across the board.
What are your forecasts for GBP/USD for the long and short term?
I expect the cable to push down to 1.50 levels in the coming months. However, in the long term we see the pair to hover around 1.45.