The pound suffered a significant sell-off last week with the EUR/GBP pair surpassing the 0.92 level. Economists at Rabobank continue to view the pound as a vulnerable currency, therefore, a move of EUR/GBP towards the last year high at 0.9325 is likely in the next weeks.
Key quotes
“The current outlook for the pound is mired by an increased chance of another bout of parliamentary chaos and/or risk that the UK will be trading with the EU on WTO terms in the New Year. Even if a trade deal is struck, the tight timeframe left for the negotiations suggests that it is unlikely to be a comprehensive agreement. This suggests that beyond an initial relief rally, a trade deal could fail to garner the enthusiasm of the investment community. If the government fails to boost investment confidence, the long shadows over the UK economic outlook could remain in place for longer and this in turn suggests that fear of a BoE negative interest rate could remain on the table.”
“Even though EUR/GBP sailed past our long-term target of 0.92 at the end of last week, we would not rule out further losses for the pound in the current environment and certainly see scope for more volatility. Bearing in mind also that the EUR has displayed broad-based strength in recent months, an escalation of tensions between the EU and UK governments with respect to the latter’s intention to break its commitment to the Withdrawal Agreement could threaten a move towards last year’s high in the 0.9325 area in the coming weeks.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Bitcoin price could be primed for correction as bearish activity grows near $66K area
Bitcoin (BTC) price managed to maintain a northbound trajectory after the April 20 halving, despite bold assertions by analysts that the event would be a “sell the news” situation. However, after four days of strength, the tables could be turning as a dark cloud now hovers above BTC price.
Bank of Japan's predicament: The BOJ is trapped
In this special edition of TradeGATEHub Live Trading, we're joined by guest speaker Tavi @TaviCosta, who shares his insights on the Bank of Japan's current predicament, stating, 'The BOJ is Trapped.'