9 Jul 2015
EUR/GBP analysis: Patience before instilling shorts – KBC
FXStreet (Barcelona) - The KBC Bank Research Team shares their observations on EUR/GBP’s performance, and further notes that the pair seeks a catalyst for a move below 0.70.
Key Quotes
“Yesterday, the correction of sterling continued. The UK data were not to blame. The BRC shop prices ‘improved’ from ‐1.9% Y/Y to ‐1.3% Y/Y and the Halifax house prices rose 1.7% M/M and 9.6 Y/Y (0.3% M/M and 8.6% Y/Y was expected). Even so Cable lost another big figure declining from the 1.5470 area to the mid 1.53 area. UK finance Minister Osborne post‐election budget might have been an excuse to offload some GBP long positions. EUR/GBP was also squeezed higher in the run‐up to the UK budget statement and regained the 0.72 big figure. 2015 growth was revised marginally lower (2.4% from 2.5%) The target for a budget surplus was delayed by one year to 2019/20. At the same time, the budget announced several structural reforms. At least for now, those reforms didn’t help sterling. EUR/GBP closed the session at 0.7211 (from 0.7125). Cable settled the day at 1.5361 (from 1.5462).”
“Later today, the BoE will decide on monetary policy, but no change and no policy statement is expected. We had a cautious sell‐on‐upticks approach and expected EUR/GBP to drift lower in the 0.7483/0.7014 range. Since the end of last week, we turned more cautious on sterling as EUR/GBP neared the range bottom.”
“We keep the working hypothesis that high profile news is needed to push EUR/GBP sustainably below 0.70. Yesterday, EUR/GBP shorts finally took profit. This move can still go somewhat further. We wait for more return action higher in the range to install EUR/GBP shorts.”
Key Quotes
“Yesterday, the correction of sterling continued. The UK data were not to blame. The BRC shop prices ‘improved’ from ‐1.9% Y/Y to ‐1.3% Y/Y and the Halifax house prices rose 1.7% M/M and 9.6 Y/Y (0.3% M/M and 8.6% Y/Y was expected). Even so Cable lost another big figure declining from the 1.5470 area to the mid 1.53 area. UK finance Minister Osborne post‐election budget might have been an excuse to offload some GBP long positions. EUR/GBP was also squeezed higher in the run‐up to the UK budget statement and regained the 0.72 big figure. 2015 growth was revised marginally lower (2.4% from 2.5%) The target for a budget surplus was delayed by one year to 2019/20. At the same time, the budget announced several structural reforms. At least for now, those reforms didn’t help sterling. EUR/GBP closed the session at 0.7211 (from 0.7125). Cable settled the day at 1.5361 (from 1.5462).”
“Later today, the BoE will decide on monetary policy, but no change and no policy statement is expected. We had a cautious sell‐on‐upticks approach and expected EUR/GBP to drift lower in the 0.7483/0.7014 range. Since the end of last week, we turned more cautious on sterling as EUR/GBP neared the range bottom.”
“We keep the working hypothesis that high profile news is needed to push EUR/GBP sustainably below 0.70. Yesterday, EUR/GBP shorts finally took profit. This move can still go somewhat further. We wait for more return action higher in the range to install EUR/GBP shorts.”