Societé Generale - "Underlying instability in the FX market is now so evident that politicians are reacting trying to shape expectations. Normally, they would have little or no impact, but in a period where animal spirits roam (Farmer 1987, 2011) managing market expectations can easily tilt the equilibrium. Merkel tells us 1.30-1.40 is the new normal, NZ tells us their currency level is not normal, BoJ says 90-100 is the new normal (same range we gave incidentally and with as precise a science). The BoE is doing its best to break the equilibrium in GBP and has by all accounts succeeded.
The UK MPC minutes showed a continued willingness to expand QE in this case to new assets. This is taken as an invitation to further sell the GBP/USD with the June 2012 low very close by at 1.5269. A trader once told me that it is a courageous man that catches a slicing knife and I suspect the market will probe the break below this support before deciding if it needs to consolidate gains. UK job data continued to be encouraging but the signs point to a slow down as the reality catches up. Whatever happens; GBP/USD remains a clear medium-term sell."