MNI Analysis shows that any recoveries.....>

STERLING: MNI Analysis shows that any recoveries in Sterling are likely to be

shallow and short-lived:

-A weak quarter of growth has disrupted and postponed the Bank of England's rate

cycle

-Options market appears to have embraced the lower pound, seeing little chance

of a meaningful recovery for GBP/USD

-MNI PINCH model continues to see traders marking down the probability of an

August rate hike

-Firstly, the CFTC positioning report shows that the drop in the GBP/USD futures

net long position over recent weeks hasn't only been the result of traders

closing successful longs, but of non-commercial traders initiating shorts.

-Secondly, as the GBP/USD spot price has declined, the average strike prices of

both vanilla put and call options have corrected lower regardless of expiry

date, indicating that options traders have embraced the pullback in GBP/USD.

-See MNI Analysis email for full details.