High conviction FX trades: Short GBP - Westpac

Research Team at Westpac, suggests going short on GBP/USD from 1.3057, with stop of 1.3210 amongst their high conviction FX trade.

Key Quotes

“The BoE’s aggressive easing package should continue to reverberate on the pound. Gilt purchases recommenced this week – albeit with some hiccups – but other measures will only be rolled out in the weeks ahead. Moreover, the MPC has indicated it is ready to cut the bank rate yet further, so easing talk will remain at the fore.

The only real brakes on GBP/USD as it eyes 1.28 are the overhang of spec positioning (CME leveraged funds already short -66.6k contracts last week) and of course a reluctance to load up on USD. Short GBP/AUD should remain popular, perhaps too short GBP/CAD.”