In a classic bit of "buy the rumor, sell the news" action, cable is off about 200 pips since the U.K. printed a 3-year GDP growth high of 0.8% on Friday. The pound may just be taking a break from a powerful rally from $1.48 to $1.62 in the four months since Mark Carney came on board the Bank of England.
Baking the shorts who expected him to loosen policy even further, Carney has leaned hawkish since taking the post. The momentum has analysts raising their Q1 estimates for the pound (vs. the euro) more than any other currency.
If any shorts still have any capital left ... The pound “fully reflect(s) some of the more positive news we’ve had coming from the U.K," says Morgan Stanley's Ian Stannard. “Much of that now is now fully priced-in, so I think it’s going to be difficult for sterling to maintain those gains.”