EUR/USD had an interesting week and GBP/USD had a very turbulent week. What’s next? Here are three opinions:
Here is their view, courtesy of eFXnews:
EUR/USD: A Push Toward 1.1920; GBP/USD: 1.35-1.136 Ahead On A Steeper UK Curve – ING
ING FX Strategy Research maintains its bullish bias on EUR/USD ahead of the ECB October meeting.
“Markets look confused over the ECB story Markets have so far shown little reaction to source stories that the ECB could cut their PSPP programme in half next year and run it for nine months.
Our house view is a for a more aggressive cut to €20-25bn pm, but potentially an extension until end 2018. We’re generally positive on EUR/USD and barring an upside US CPI today, would tend to favour EUR/USD pushing on to the 1.1920 area,”ING argues.
On GBP front, ING expects the currency’s narrative to slowly shift to the Nov BoE meeting after next week’s EU leaders summit.
“We see upside risks as the Bank may not only hike, but also signal that this is more than a ‘withdrawal of stimulus’ hiking cycle. We look for GBP/$ at 1.35-1.36 on a steeper UK curve,” ING adds.
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EUR/USD: Giving Up On Finding Cheaper Dips; GBP/USD: Longs Can Appeal Here – SocGen
Societe Generale Cross Asset Strategy Research remains convinced that if the European economic recovery continues, and the ECB pushes ahead with policy normalisation, we will see EUR/USD trade above 1.30 within 18 months or so.
“As for the near term, we’ve just about given up hope of finding better (cheaper) levels to buy EUR/USD, but that may just mean 1.17-1.21 becomes a bit of a range for now,” SocGen argues.
Meanwhile, SocGen thinks that long GBP/USD around current levels looks attractive to express a USD bearish bias.
“If you think the Brexit mood is so negative that things can’t get worse, and if you think that the dollar’s had and squandered its chance of a major correction against the euro, then GBP/USD longs can appeal at current spot levels,” SocGen adds.
EUR: Outlook Brightening Up As Political Cloud Is Lifting; Staying Long EUR/USD – Credit Agricole
Credit Agricole CIB FX Strategy Research expects the political jitters in the wake of the Catalan independence referendum to start abating in the coming days.
“In particular we think that the Catalan leaders will not proclaim official independence on the basis of the referendum result alone and, instead, call snap elections for early 2018. This much could allow investors to shift their focus to the improving Eurozone fundamentals and the upcoming October ECB meeting.
We expect that the announcement of the details of the ECB’s QE taper will have a positive impact on both EGB yields and EUR from here,” CACIB argues.
In terms of the data calendar next week, CACIB notes that it is relatively light with only the German ZEW and the final HICP data out of the Eurozone due.
In line with this view, CACIB maintains a long EUR/USD position from 1.1770 with a taget at 1.2200, and a stop at 1.1520.
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