A week after the ECB made its shift to the hawkish side, the BOE joined with its own with one voter for a rate hike. What’s next? Further gains or a sell opportunity?
Here is their view, courtesy of eFXnews:
GBP: Gains Likely To Fade N-Term; Levels To Watch – Citi
GBP recent gains are likely to fade in the near term against both the EUR and USD, projects CitiFX Tech.
In particular, Citi thinks that EUR/GBP could break above 0.90 before coming under renewed pressure and notes that GBP/USD seems to be following a similar path to the price action seen in Feb-June and July-Oct 2016.
“Initial support is met around 1.1960-1.2168. A break below here would suggest a move towards as low as 1.12,” Citi adds.
Bigger picture, Citi Tech is looking for GBPUSD to eventually head lower towards 1.05 and looking for EUR/GBP to move lower towards 0.7700-0.7750 in the coming 12-18 months.
GBP/USD is trading circa 1.2350 and EUR/GBP is trading circa 0.8720 as of writing.
GBP: BoE Made A Hawkish Twist; What’s Next For GBP? – Danske
Danske Bank Research notes that while the Bank of England MPC left monetary policy unchanged at the March meeting, there was a hawkish twist.
1- Kristin Forbes (a known hawk) voted for a March hike. 2– the statement revealed that ‘some members noted that it would take relatively little further upside news some”¦for them to consider that a more immediate reduction in policy support might be warranted’.
Still, Danske maintains its call for the BoE to remain on hold for the next 12 months.
On the FX front, Danske sees risks skewed on the upside for EUR/GBP, expecting GBP to underperform vis-Ã -vis the USD and EUR in coming weeks and following the triggering of Article 50.
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