GBP could be sold into rallies, Euro awaits ECB – CIBC

“Sterling rally is going to be cautious, modest and the currency could be sold into rallies”, says Jeremy Stretch, Head of G10 FX at CIBC while discussing the fundamental aspects of Pound-Dollar exchange rate. Stretch believes next 24 hours are crucial for Euro-Dollar pair as market participants would be all ears for ECB commentary on possible tapering of its QE program. Stretch is joined by Tip TV’s Zak Mir and Mike Ingram, Strategist from BGC Partners.

Key points

ECB - Dec meeting would be pivotal, Bank could be forced to extend the maturity of the program. This coupled with higher inflation forecasts would create room for cheering the efficacy of the QE program and Taper talk.

Markets are heavily short on Sterling, thus the risk of a correction, which is likely to be modest. Talk of Scottish referendum is another risk.