The EUR/GBP cross took the brunt of the strength of the euro on Thursday after the meeting of the Bank of England (BoE) and the European Central Bank (ECB). ING economists expect the cross to reach 0.89 in the first quarter of next year.
Key Statements:
“EUR/GBP faces a double whammy, not only because of the ECB’s hawkish stance, but also because of what this stance means for the global risk environment. Sterling has high beta on global risk given its large current account deficit and the large role of financial services in the UK economy.”
“We have a forecast of 0.89 for the EUR/GBP in the first quarter of 2023 and yesterday’s move by the ECB supports the forecast. We have also just released the UK retail sales figures for November, which look very poor.”
“Interestingly, the Swiss National Bank (SNB) will protect the Swiss franc much more than the BoE will protect the British pound and so we see GBP/CHF heading lower as well.”
Source: Fx Street
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