Analyst at Nomura expects GBP to trade heavily following last week’s BoE meeting, and have entered long EUR/GBP positions through a 0.92/0.94 call spread expiring 31 October.
“We do not expect next week’s labour market and CPI data to change the narrative, and see a risk of investors wanting to be long euros switching out of short USDs into short GBP, particularly if US data hold up. Furthermore, we argue relative output gaps are likely to swing further in the euro area’s favour, suggesting scope for further upside in EUR-GBP rates differentials in the medium term, which should push EUR/GBP higher. This framework also continues to point towards medium-term EUR upside risks and NOK/SEK downside.”
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