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EUR/GBP points to 0.70 in the medium term – Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 12, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Edinburgh) - According to Jane Foley, Senior FX Strategist at Rabobank, the European cross could be headed towards 0.70 in the longer run.

    Key Quotes

    “Over the past month or so sterling has fallen out of favour with the markets. Through much of the past year, sterling was elevated by the perception that the Bank of England would be the second central bank after the Fed to hike interest rates this cycle. This may still be the case”.

    “However, the markets have been adjusting to the likelihood that there will be a significant lag before the BoE starts to tighten interest rate policy”.

    “On the back of an anticipated widening in interest rate differentials in favour of the USD, cable has recently fallen to its lowest levels since 2010 and we expect further weakness this year towards GBP/USD 1.44. EUR/GBP may still edge towards 0.70 later this year on the back of a dovish ECB, but UK political risk related to EU membership has the potential to lift volatility and may whack GBP hard”.
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