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- EUR/GBP: Potential to rise amid hawkish risks skewed to the ECB – TDS
EUR/GBP: Potential to rise amid hawkish risks skewed to the ECB – TDS
The ECB/BoE meet this week, with prospects of a hawkish surprise from the former. That favors upside in EUR/GBP, in the view of economists at TD Securities.
Big risk for GBP lies in the vulnerability of the housing market
“In Europe, we expect a 50 bps hike from both the ECB and BoE but see the hawkish risks skewed to the former. That favors upside in EUR/GBP, as the ECB has the wiggle room to deliver 75 bps, while the BoE should disappoint market terminal rate expectations over time.”
“China reopening favors EZ growth over the UK, especially in the context of housing vulnerabilities. In turn, we argue that the recent dip of EUR/GBP offers a good entry point to start scaling into long exposure ahead of this week’s event risk.”
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