Back
6 Jan 2015
EUR/GBP may move towards 0.76 by 2015-end – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, anticipates the EUR/GBP pair to move towards 0.76 levels by 2015-end, further noting that USD might play a major role in GBP/USD direction ahead.
Key Quotes
“Since the start of the year, cable has dropped around 2.8%. The move is counter to our expectation that cable would continue to consolidate above the 1.55 level”
“A weaker than expected set of UK manufacturing PMI numbers last week was a contributing factor to the downward move in cable, as has been the weak set of UK service PMI data this morning.”
“However, we would apportion much of the move lower in cable to weaker tone of EUR/USD, coupled with the current reluctance of EUR/GBP to sustain levels below the 0.7800 area.“
“Disinflationary pressures have clearly picked up in the UK economy meaning that the BoE will be in no rush to hike rates. However, disinflation has taken a firmer hold in the Eurozone, and when the BoE do eventually hike rates, it is likely to be comfortably ahead of the ECB. We maintain our forecast for a slow move towards EUR/GBP 0.76 on a 12 mth view.”
“Assuming that EUR/GBP can grind lower, some downside protection should be offered to cable on the event of further downside pressures in EUR/USD.”
“While will have revised down our cable view we still see the potential for bouts of volatility in the coming months. The approach of the UK general election in May could justify some nervousness in GBP. That said, the general performance of the USD could have a more significant impact on GBP/USD.”
Key Quotes
“Since the start of the year, cable has dropped around 2.8%. The move is counter to our expectation that cable would continue to consolidate above the 1.55 level”
“A weaker than expected set of UK manufacturing PMI numbers last week was a contributing factor to the downward move in cable, as has been the weak set of UK service PMI data this morning.”
“However, we would apportion much of the move lower in cable to weaker tone of EUR/USD, coupled with the current reluctance of EUR/GBP to sustain levels below the 0.7800 area.“
“Disinflationary pressures have clearly picked up in the UK economy meaning that the BoE will be in no rush to hike rates. However, disinflation has taken a firmer hold in the Eurozone, and when the BoE do eventually hike rates, it is likely to be comfortably ahead of the ECB. We maintain our forecast for a slow move towards EUR/GBP 0.76 on a 12 mth view.”
“Assuming that EUR/GBP can grind lower, some downside protection should be offered to cable on the event of further downside pressures in EUR/USD.”
“While will have revised down our cable view we still see the potential for bouts of volatility in the coming months. The approach of the UK general election in May could justify some nervousness in GBP. That said, the general performance of the USD could have a more significant impact on GBP/USD.”