Jane Foley, Senior Currency Strategist at Rabobank, comments “Given the determination of the Fed, the BoJ and other central banks to maintain very accommodative policy conditions for some time to come yet, we anticipate that risk appetite will hold up well into 2013 despite the ongoing poor health of the G10 economy. We expect that this will lead to further short-covering in the EUR and also to greater interest in higher yielding currencies. In this scenario sterling is also likely to perform poorly relative to other G10 currencies. Thus, while we expect USD weakness will allow cable to creep higher modestly in 2013, we think EUR/GBP could end 2013 in the 0.83 region”.
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