Sterling Carry Advantage Erodes as BoE Policy Fades

Deutsche Bank's Shreyas Gopal warns that the British Pound may experience weakness due to the narrowing of its carry advantage against the Euro.

The pattern of early market speculation on tightening fading as Bank of England (BoE) meetings approach has kept the Pound stable and EUR/GBP in a narrow range, but this strategy may have run its course.

A 6-3 vote to hold rates and unchanged guidance from the BoE is expected to trigger some sterling weakness, according to Gopal, as the ECB's tightening measures erode the Pound's carry advantage.