J.P.Morgan: Increasing Conviction In The Bearish View

J.P.Morgan have increased conviction re: GBP bearishness. They flag the following:

• “Rate spreads and growth revisions are now both working in the bearish GBP direction.”
• “Last week we rotated our GBP/CHF short into a GBP vs USD and CHF basket.”
• “Recent dovish BoE commentary has introduced the risk of an earlier pause.”
• “The Sahm rule has been triggered and the UK labour market is loosening at the fastest pace in G10.”
• “Lead indicators for growth suggest further weakness ahead. Soft and hard data have both been undershooting.”
• “Positioning data suggest GBP longs are close to multi-year highs just as policy tightening starts to bite.”
• “Fair value for GBP/USD ranges between 1.21 and 1.24 on our models.”
• “EUR/GBP rate spreads now imply a move above 0.87. Combined with our EUR bearish view that suggests a large move lower in GBP/USD is ahead.”
• “UK productivity continues to materially underperform the US and Europe.”