GBP: Liquidity issues & BoE repricing at play – ING
|Over recent months, EUR/GBP has tended to sell off on tariff-related headlines, given that the eurozone is far more exposed to US trade than the UK. Yet EUR/GBP surprised yesterday and spiked higher, ING's FX analyst Chris Turner notes.
0.8475 is decent resistance for EUR/GBP
"Two factors are at play, we think. The first is that the euro has better liquidity than sterling and will benefit more as investors leave the dollar. The second is that the looming global trade war is proving the greater leveller for rate spreads."
"The 'exceptionalism' of high UK interest rates is being unwound, where UK two-year swap rates fell 12bp more than their eurozone counterpart yesterday. This may be a dominant theme in the near term."
"0.8475 is decent resistance for EUR/GBP, above which 0.8550 will be the target. Sterling is also a liquid reserve currency so can benefit from the shift away from the dollar. However, GBP/USD has come a long way in a short period of time and may be due some consolidation in the 1.30-32 area."
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.