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EUR/GBP heading towards 0.68 in the medium term – Societe Generale
FXStreet (Edinburgh) – Researchers at Societe Generale expect the cross to slowly grind lower towards the 0.68 area in the upcoming months.
Key Quotes
“Governor Mark Carney said last week that “the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year”. This is a clear shift in the BoE’s forward guidance”.
“The shift in the BoE’s monetary stance will induce a much wider divergence with the ECB than the Fed. As a result, the GBP should have more potential in the months ahead against the EUR than the USD. Over the medium-term, the EUR/GBP has been strongly linked to the inflation differential between the UK and the euro area, with each currency negatively related to the local CPI”.
“Our technical analysts point out that the medium-term EUR/GBP outlook remains bearish. The FX rate is poised to continue the correction towards 0.68/0.6650, the lower limit of a descending channel drawn since 2008”.
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EUR/GBP heading towards 0.68 in the medium term – Societe Generale
Source: FXStreet
