We recommend shorting GBPUSD going into Wednesday’s UK employment report. The sequence of dovish BoE minutes and strong NFP has weakened GBPUSD below the support level of 1.518. Bank of England revised its inflation and growth forecast to the downside, and we are expecting the hiking cycle to start in Q2 16 (MPC Watching: A higher bar set for rate hiking, November 6, 2015). In addition, we expect a below-consensus employment report, and look for a somewhat softer pace of wage growth. A soft print in wage growth and slower job creation would add pressure to the pound, eyeing a low of 1.4566.
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