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### POV: GBP Brexit-watching, not..........>

STERLING
STERLING: ### POV: GBP Brexit-watching, not star-gazing.
GBP is the weakest of the G10 currencies currently, being the worst performer
over the past month. GBPUSD is down over 3.0% over the past month. EURGBP is
breaking higher from its major trading range.
The GBP decline is accelerating despite many macro/fundamental indicators  and
models suggesting GBP is undervalued. Positioning indicators are also
approaching extreme bearish levels.
GBP's continued underperformance despite appearing overextended on fundamental
measures is consistent with weakness being driven by political (Brexit) factors.
This was highlighted by the GBP reaction to the BoE meeting. At first glance,
the 9-0 vote to hike rates and 2-3% 'R-Star' estimate of the nominal equilibrium
rate of interest should have steered the yield curve higher after the August 2
meeting. Instead, the BoE emphasising Brexit uncertainty seems to have
accelerated the GBP decline (See MNI Connect Publication).

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