CITI: GBP – Remains a Brexit dilema

From the FXWW Chatroom: Extremely subdued activity (when compared to recent moves) and I can’t see this changing in the immediate future. May’s EU speech passed with little impact and perhaps inflation data and estimates may need to see more evidence in order to back up some of the lofty claims that are running through the press. A generally stronger USD isn’t helping the headline cable pair but there is a definite scope for political events to have a larger impact on the level of GBP than that of data in the very near future. Having said that, GBP looks to be at reasonable fair value and thus the chance of a short term rally has increased. We prefer to wait for such a rally but hold extremely small downside structures should we get a scare event in the mean time. Re- sell levels remain 1.2420,1.2500 and major at 1.2600-20  support at 1.2190 1.2090.

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