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25 Feb 2013
Forex Flash: EUR/GBP buy on dips – Rabobank
The pair is resuming its upside again on Monday, consolidating gains above the key resistance at 0.8700
Recent downgrade of the UK credit rating by agency Moody’s to Aa1 plus the outperformance of the single currency at the beginning of the week are propping up the upside in EUR/GBP, although the upcoming results from the Italian elections could undermine the momentum.
Jane Foley, Chief Currency Strategist at Rabobank, comments that further QE would keep the sterling on the defensive camp in case the BoE decides to revise lower its growth forecasts. “More specifically sterling’s decline this year is a function of the pound having lost support from euro diversification trades which were supporting the unit a year ago. This has left sterling exposed to the weak set of UK fundamentals. We expect that sterling will remain vulnerable in the coming months… That said, we would view pullbacks in EUR/GBP as buying opportunities and look for a move towards the EUR/GBP 0.88/89 area medium-term”, concluded Foley.
Recent downgrade of the UK credit rating by agency Moody’s to Aa1 plus the outperformance of the single currency at the beginning of the week are propping up the upside in EUR/GBP, although the upcoming results from the Italian elections could undermine the momentum.
Jane Foley, Chief Currency Strategist at Rabobank, comments that further QE would keep the sterling on the defensive camp in case the BoE decides to revise lower its growth forecasts. “More specifically sterling’s decline this year is a function of the pound having lost support from euro diversification trades which were supporting the unit a year ago. This has left sterling exposed to the weak set of UK fundamentals. We expect that sterling will remain vulnerable in the coming months… That said, we would view pullbacks in EUR/GBP as buying opportunities and look for a move towards the EUR/GBP 0.88/89 area medium-term”, concluded Foley.