Halister News

(Bloomberg) -- Invesco Asset Management retains its small and long-term GBP overweight position against USD even as the trade may experience some pain in the short term heading into the Fed meeting, portfolio manager Sean Connery says in interview.

• Long-term view on sterling remains positive as U.K. will probably vote to remain in Europe and expectations for BOE rate increases are too extreme, with expected hikes priced too far out; they could be brought forward, offering support to sterling
• Trade initiated with GBP/USD at 1.40; says it would re- evaluate out the position on any breach of March 2009 low (1.35)
• Says “small” overweight position reflects the risk U.K. votes to leave Europe
• Fed meeting may represent a short-term headwind to sterling if U.S. central bank sounds hawkish
• Expects BOE meeting to be a non-event tomorrow, while Osborne will probably try to avoid sounding too negative and influencing consumer confidence ahead of referendum vote in June
• Volatility to remain high in the run-up to the vote; expect that U.K. will vote to remain even as says the referendum outcome remains too close to call
• Still, there is potential for good upside in sterling if U.K. votes to remain while a “leave” outcome would shock markets
• NOTE: Invesco total AUM was $740.9b as of Jan.31, according to data on its website
• NOTE: Chancellor Osborne to present budget later today; focus will then switch to BOE rate decision tomorrow; see what to watch for GBP risk events this week