Low-1.20s possible again after UK election - BNP Paribas

BNP Paribas as the dust settles on the UK election

BNP Paribas Research comments on GBP direction in the aftermath of the UK elections noticing that GBP has already fallen sharply but has not yet fallen to the 18 April level (1.2516) when the election was announced.

"GBPUSD hit 1.2350 in April and 1.2110 in March. These levels appear possible again.

BNP Paribas FX Positioning analysis shows that the FX market went into the election effectively neutral on GBP at -6 (on a +/- 50 scale). The large short exposure of -30 to -40 had largely been unwound.

Accordingly, there is significant potential for GBP shorts to be re-established and for the GBP to weaken further from here," BNPP argues.

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