UBS - "The pound, like the yen recently, is undergoing a sharp devaluation against the other major currencies. Late on Friday, Moody's stripped the UK of its AAA rating citing continued weakness in Britain's medium term growth outlook. We remain bearish sterling and expect Cable to trade in a lower 1.40-1.50 range over the next couple of months.
Financial markets are set for a challenging week. (...) This week's key points for currencies are:
- Bernanke to be dovish but Fed hawks gaining traction
- Italy's elections key in the week ahead for euro
- Abe to announce BoJ nominations, still buy USDJPY dips
- BoE tilts towards more easing, remain short Cable
- SNB reiterates franc cap to remain for forseeable future
- Swedish data supports Riksbank's optimism on krona
- Australian capex key next week, stay short AUDNZD"
Mansoor Mohi-uddin, Managing Director and Head, Foreign Exchange Strategy at UBS Macro Research