GBP: still expected to outperform longer term? - Nomura

Analysts at Nomura explained that in the long term they still expect GBP to outperform especially against the USD because the extremely low real rates will likely eventually revert. 

Key Quotes:

"We do not see much downside risks against USD from here, after the initial negative shock as well. But for now we will close out and wait for better re-entry levels as the dovish BoE today should see a few sessions of GBP underperformance because of the lack of UK data and/or central bank speakers until the week of 14 August, when CPI, employment and retail sales figures for July are released."

"EUR/GBP has been trading largely flat over the past two weeks before the BoE outcome, even amid broad EUR appreciation. As the immediate risk of a BoE hike has disappeared for now, there may be further room for a rise in EUR/GBP in the near term and a break above 0.9050 is the next key resistance level."

"We think the market’s inertia to move its focus away from the negatives of Brexit will keep the market pricing a November BoE hike low unless there is a shift in tone by the BoE speakers inbetween, and positive economic data support a hawkish shift by BoE officials. Notably, any public statements from new MPC members such as Silvana Tenreyro and/or Sir David Ramsden will be watched out for among the typical market labelling along the dove/hawk charts."