The EUR/GBP cross has bounced back to 0.8500. Société Générale economists analyze the pair's prospects.
GBP, along with CHF, will be one of the favorite European currencies to go bearish
EUR/GBP's repeated attempts to break below 0.8500 have failed this year, while the Pound has found support in the BoE's higher interest rates and the market's expectation that the UK will cut rates somewhat less than the ECB this year.
With both economies stagnating, the strongest argument for the UK to cut more is that higher rates give more room to act when inflation is considered low enough to do so.
We will continue to recommend buying EUR/GBP when it approaches 0.8500and the GBP, along with the CHF, will be one of the favorite European currencies to go bearish.
Source: Fx Street
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