EUR/GBP: En-Route To 0.84 But 2 Caveats Remain; UK Data Likely GBP Positive This Week – SocGen

The pound has reached the highest levels against the dollar since 2016 and it also makes gains against the euro. What’s next?

Here is their view, courtesy of eFXdata:

Societe Generale Cross Asset Strategy Research discusses GBP outlook and maintains a structural bullish bias especially against the EUR.

“The calendar throws out UK labour market data tomorrow (look for slightly faster wage growth at 2.7% ex-bonuses). We expect core CPI (Wednesday) up a tick at 2.5% y/y, and retail sales are due on Thursday. The market already attached a very high probability to a May rate hike and at some point will probably become convinced that rates will be above 1% in early 2019. All of which supports the pound.

We expect EUR/GBP to reach 0.84 but two caveats remain: Firstly, the UK economy is still slowing and still underperforming its peers; and secondly, as CFTCF data show, there has been a huge turnaround in sentiment and positioning. Sterling was, and still is, cheap on a historical basis and the market’s net short was huge. This move is only really an unwinding of that position as sentiment lurches,” SocGen argues.

For lots more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.


Leave a Reply

Яндекс.Метрика