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.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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