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Foreign exchange markets continue to be characterised by low volatility, says Saxo Bank's John Hardy, but GBP is approaching an interesting inflection point at 0.90 versus EUR. Meanwhile, industrial metals are lower following a cautious speech by Chinese president Xi Jinping.
Squawk / 20 July 2016 at 8:47 GMT
Head of FX Strategy / Saxo Bank
Sterling rallies on BoE report. The UK data just out was rather supportive, as the June jobless claims came in better than expected and May payrolls data looked very strong, but we'll need to see July data to start to see the actual impact of the Brexit vote. But sterling is more likely rallying on a BoE agents report out around the same time that makes a few comments worth note, including:

- Early evidence shows banks maintaining lending after vote
- Firms see positive effect on exports after Brexit vote
- No evidence of sharp slowing of activity
- A third of UK firms see negative Brexit impact in next 12 months
- Firms maintain business as usual
- Firms report reduced demand fo commercial real estate

The market is very short of sterling and has now "unbroken" a key GBPUSD level around 1.3100 - some squeeze risk for sterling shorts here driven by positioning on what looks like rather positive news.


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