The pound is sensitive to the political news while the euro is stable. How long can this last?
Here is their view, courtesy of eFXdata:
Societe Generale Cross Asset Strategy Research discusses GBP outlook and thinks that current political induced dips in GBP/USD are a buy as long as EUR/USD doesn’t change course and breaks below the important 1.15 level.
“We favor buying sterling into politically-inspired weakness, buying GBP/USD dips as long as EUR/USD 1.15 holds.
It’s worth re-emphasizing that the main driver of GBP/USD remains EUR/USD. The EUR/GBP correlation with yields has been unstable and is now awful. Likewise the correlation between GBP/USD and real yields. There just isn’t a correlation between EUR/USD and EUR/GBP, but the correlation between EUR/USD and GBP/USD is high, and stable most of the time,” SocGen argues.
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