Royal Bank of Scotland - "In contrast to the effective tightening in the US, the BoE minutes generated an effective policy easing in the UK. In response the GBP has naturally fallen. But it is more than that. The shift in tone by the BoE is worse for the GBP because its shift towards countenancing more QE or perhaps a cash rate cut comes not because it is undershooting inflation. It comes entirely because it is undershooting on its desire for growth. And worse still it is forecasting inflation to remain above its “target” for two years. And worse again it wants to address a weakening trade balance. The GBP gets three strikes and is out.
I tend not to mention the so-called currency wars, but if any new battle-ship was entering the fray it is HMS-Bank of England. One could be excused for concluding that the BoE wants to emulate the recent experience in Japan, damn the torpedoes and drive the GBP down.
Is it too late to sell GBP? I suspect not. These are no longer ranging markets, big moves are afoot. The USD should be bid, the GBP should remain offered. Just as many got left behind waiting for the retracements in JPY in Dec/Jan, the same may be true for GBP/USD. It s the more obvious pair to short at this time."