Goldman Sachs note that "there are.........>

STERLING: Goldman Sachs note that "there are several domestic factors that look

likely to weigh on GBP in the weeks ahead. Most importantly, the active debate

on -ve rates could come into sharper focus into the Aug MPC, where our

economists think the BoE will revise down its estimate of the ELB, probably in

the form of a qualitative description ("now moderately -ve"). Our rates

strategists think this could push front-end rates about 15bp lower, which could

be worth about 1-2% on EUR/GBP on our standard metrics. The lagging economic

recovery in the UK & looming Brexit deadlines - along with a continued push for

a less-ambitious post-Brexit trading relationship with the EU- underscore the

case for domestic underperformance. However, FX investors should keep in mind

that GBP embeds a "beta" to broad mkt risk. Except when Euro Area-specific

factors like sovereign credit stress are driving mkts, EUR/GBP tends to trade

lower on better risk appetite. Given our generally constructive market outlook

we are still forecasting cable upside (3-month tgt of $1.28), but acknowledge

the -ve rate debate could be a near-term headwind. In light of cable's many

crosscurrents, views on the BOE policy rate are better expressed in Gilts."