FOREX: EURGBP Consolidating Above 0.88, Dips Remain Well Supported
Nov-05 12:47
- Despite a more stable session for sterling on Wednesday, EURGBP has been consolidating its position back above the 0.8800 handle, with dips remaining well supported following recent bullish developments. We touched on EURGBP vols in our earlier bullet here: https://mni.marketnews.com/3WEIaFK
- The breach of significant resistance at 0.8769 has bolstered the momentum for the cross, and this week’s retest of the breakout and subsequent bounce maintain the optimistic short-term view as both the BOE decision and budget approach. Topside targets for the broader rally include 0.8835 (held overnight) and 0.8875, the April 2023 high.
- In addition to BNP’s view above, other analysts see further upside risks for EURGBP:
- Rabobank expect the pound to remain on the back foot heading into tomorrow’s meeting given speculation of a dovish tilt. Bearish momentum continues to weigh heavily on cable in view of the USD’s recovery and Rabo retain the view that EURGBP will edge slowly higher into 2026.
- MUFG said that the pound is likely to continue to underperform on the expectations of a harsh budget, while SocGen highlighted that should tighter fiscal policy without spending restraint be the chosen cure to the UK economy’s woes, they can’t see anything GBP-friendly in that.
- BBVA also stated that Reeves’s comments reinforced the difficulty of consolidating the UK’s public finances without jeopardising an already fragile recovery, a mix that continues to pose downside risks for the GBP.
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