UK growth is set to stagnate but recession narrowly averted. Regarding the EUR/GBP, Kit Juckes, Chief Global FX Strategist at Société Générale, expects the pair to correct lower toward 0.8750.
Series of EUR/GBP higher highs being followed by largish corrections continues
“Tomorrow we’ll get UK Q4 GDP data, with a consensus at zero which dodges recession but doesn’t feel great. That sums up the UK.”
“Sterling has had a lift and the series of EUR/GBP higher highs being followed by largish corrections, continues. Maybe we correct to 0.88 or even 0.8750 before the uptrend resumes.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
The euro-pound exchange rate may be headed for a period of market correction before continuing its current uptrend, according to a research analyst at Société Générale.
The current turnaround of EUR/GBP began in late June and has helped the pair rise nearly 5% since then. SocGen’s research analyst believes this uptrend could be interrupted during the short-term and the EUR/GBP rate could correct by reaching as low as 0.88 or even 0.8750 before the trend resumes its upward trajectory.
The analyst’s report cites a number of factors that could contribute to EUR/GBP’s short-term dip in the markets: speculations about the Bank of England’s possible tapering of quantitative easing measures, economic uncertainty in both the U.K. and Europe, and investors’ reactions to a recently proposed trade agreement between the U.K. and the U.S..
Overall, despite the possibility of a short-term decline, the analyst’s report remains positive about the long-term prospects for EUR/GBP and believes that the pair could eventually reach or even surpass its 2018 high of 0.92 in the near future.
The report notes that a continued appreciation of the euro thanks to ongoing European Central Bank stimulus measures, a strengthening of the U.K.’s economy as it adjusts to post-Brexit realities, and an improving trade outlook as the U.K.’s negotiations with other countries advance could all lead to substantial gains in the EUR/GBP pair over the coming months.
Ultimately, while a correction of the current uptrend appears plausible in the short-term, the underlying outlook remains positive for the euro-pound exchange rate and suggests an eventual return to its previous highs.