EUR/GBP dip buyers? [Video]
|The UK economy is facing a cost of living crisis as higher taxation, higher goods prices, and the prospect of rising energy bills in the Autumn is weighing heavily on sentiment. The Bank of England revised growth for 2023 into negative territory in a move that prompted some analysts to see the BoE hiking once or twice more and cutting rates in 2023.
The ECB is in a different phase of their fight against inflation as they prepare to hike interest rates. Since the April meeting a string of ECB speakers have been expressing the prospects of a July rate hike. Short-term interest rate markets are now pricing in a 51% chance of a 10 bps hike at June’s meeting.
The diverging outlook between the ECB and the BoE should keep the EURGBP supported on the dips, and risk can be closely defined with stops below.
Major trade risks: The major risk here is if there is shift in monetary policy outlook from either the ECB or the BoE.
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