EUR/GBP Retracement towards 0.86 brings a return to the December low of around 0.8550 into play – SocGen

Sterling is off to the best start to the new year in G10, second only to the Dollar. Economists at Société Générale analyze GBP outlook.

Pricing of aggressive future rate cuts by the ECB vs. the BoE should keep a lid on EUR/GBP upside

The retracement of EUR/GBP towards 0.86 potentially brings a return to the December low of around 0.8550 into play. 

The price action dovetails with the 13 bps widening of 2y and 10y bond yield differentials in favour of Sterling.

The pricing of aggressive future rate cuts by the ECB vs. the BoE should keep a lid on EUR/GBP upside.