Ashraf Laidi on CNBC - August 15, 2013

Falling jobless claims figures in the UK & US are rendering claims by the BoE and Fed on rising yields to be pointless. Efforts from Carney and Bernanke to talk down yields are increasingly futile as jobless claims hit 6-year lows and 3-year lows in the US and the UK. At the end of day, Carney's forward guidance message is not so different from Bernanke's: i) Rates will not be raised before 2 year's time; ii) Bernanke refereed to 6.5% unemployment and Carney referred to 7.0% unemployment as thresholds; iii) Both used 0.5% as the maximum excess over 2% inflation. These dates are so far off the horizon, that they reduce the relevance of longer-term yields and shift volatility towards the shorter-end of the curve. Currency traders eyeing yield differentials are increasingly focusing on 2-year yields in the UK and the US as the central banks of both nations perfect the art of forward guidance. And with the UK/US 2-yr yield spread in positive territory (2-yr yields in UK above US), GBPUSD shall remain supported above 1.5350s. GBPUSD faces further upside near 1.5680-1.5700, while maintaining support above 1.5300. GBP support will also emerge from the Fed's insistence on maintaining policy accommodation due to the risk of averting disinflation. Thus, even a decision to taper purchases in September may end up being USD neutral if the tapering is deemed to be more modest than expected ie $5 bn instead of the average $10bn. For tradable Premium Insights, please visit http://www.ashraflaidi.com/premium