The pound had a nice run, thanks to some positive data. However, this may turn into a selling opportunity.

Here is their view, courtesy of eFXnews:

Short positioning is understandable given the scale of the BoE’s multi-pronged easing. Auctions for the Bank’s gilt purchases have gone well so far. The prospect of further expansion will cap GBP, the weakening of which is actually a part of the overall post-Brexit easing.

Nevertheless, recent data suggest that the immediate impacts of the Brexit vote have been mild. The British Bankers Association lending report may have shown that the number of mortgages fell, but it also stated that consumer credit has rebounded and “businesses also appear to be borrowing as usual.”

As previously outlined, squeezes should be seen as selling opportunities, but they could force a test of the 1.34s before sliding once more to the post-Brexit low of 1.2800, if not the measured move and psychological level of 1.2500.