EUR/GBP target lowered to 0.8450 and GBP/USD target raised to 1.2800 – Credit Suisse

FXStreet Insights Team FXStreet

One of Credit Suisse’s most consistent views over the course of 2023 has been GBP bullishness. Economists at the bank take a fresh look at the Pound.

GBP could well become and then remain among the highest yielders in G10 space

Getting to a 5.75% rate by December as markets are pricing may simply be too slow and the BoE might yet need to start hiking in 50 bps increments again, as it last did in Feb. It’s also the case that GBP could well become and then remain among the highest yielders in G10 space, something which can attract carry-chasing money to the UK at a time of low global asset volatility.

We see room for the broad trade-weighted GBP to test post-2016 highs seen in early 2022 around 2% above current levels.

We lower our near-term EUR/GBP target to 0.8450 and raise our GBP/USD target to 1.2800, levels at which we would finally be tempted to take profit if reached quickly.

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

Week ahead – Central bank and earnings bonanza could roil markets

Fed, ECB and BoJ to sit on the sidelines after September hikes. But RBNZ and BoC poised to lift borrowing costs. Inflation data out of the US, Japan, Australia to also be important. UK budget: no surprises would be good news for the Pound.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.