On a trade-weighted basis, GBP is now trading at the highest levels since that fateful summer of 2016. Friday's US December jobs data could push the EUR/GBP lower to the 0.8280/8300 neighborhood on strong figures, economists at ING report.
A lot is priced in for the Bank of England now
“A lot is priced in for the Bank of England now. A 25bp hike is 80% priced for the 3 February meeting and the Bank Rate is priced at 1.00% for the August meeting. Our rates traders think that may be sufficient pricing for the time being. But that pricing looks unlikely to be unwound before the 3 February meeting and the BoE might feel emboldened by the hawkish shift from the Fed.”
“Our 2022 FX view has been that the BoE story keeps GBP/USD better supported than EUR/USD in a strong dollar environment – and that EUR/GBP trades lower. We continue to hold that view and any dollar strength on the jobs data today could push EUR/GBP closer to the 0.8280/8300 area.”
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