After the recent rally in cable, Deutsche Bank says that it is taking profit on its pound position against the dollar. Adding that they see a potential „dovish surprise“ for the quid at this week’s BOE meeting.

„Having been bullish on the pound since the start of the year, we no longer think the pound presents attractive risk-reward in the short-term. A lot of the domestic good news for the UK is now in the price.“

I’m guessing the dovish risks are more to do with the rates pricing here. Markets are expecting at least one more rate hike after the one this week but a further hike to bring the bank rate to 5.00% remains questionable at this stage. So, if there is some affirmation there by policymakers then that could result in a bit of a dovish spin for the pound.

/GBP

This article was written by Justin Low at www.forexlive.com.