GBP: Bulls Selling On Crosses; CHF: More Selling Ahead - BofAML
Bank of America Merrill Lynch FX Strategy Research notes that although GBP is lower following the BoE meeting and the US jobs report this week, it has been supported since the UK elections from market expectations of a transition period and possibly a soft Brexit.
"Still, EURGBP is getting close to historically high levels and GBP bulls could consider selling.
However, disappointment from slow Brexit negotiations in the rest of the year could lead to a correction of cable lower. Risk averse investors could also consider selling GBPJPY," BofAML adds.
On CHF, BofAML expects further selling ahead as the currency has finally started weakening which should attract new players to engage in trade on the short side.
"Positioning and valuation suggest more downside risks, although the path may not be smooth following the sharp recent move.
Our view remains that CHF remains overvalued and should weaken as the Eurozone outlook improves and the ECB exits from unconventional policies," BofAML adds.