4 Aug 2015
EUR/GBP keeps the negative outlook for 2016 – Rabobank
FXStreet (Edinburgh) - According to Jane Foley, Senior Currency Strategist at Rabobank, the perspective for the European cross remains tilted to the bearish camp.
Key Quotes
“In a July speech BoE Governor Carney commented that “the decision as to when to start such a process of adjustment [in interest rates] will likely come into sharper relief around the turn of this year”.
“The BoE is clearly preparing the ground for a rate hike in the foreseeable future and based on recent comments from MPC hawk Weale, it is likely that the committee’s monthly policy vote could be split as soon as August”.
“Insofar as the BoE along with the Fed are the only other major central banks preparing for an interest rate hike, we expect GBP and the USD to be the best performing G10 currencies in the coming months”.
“That said, slow growth in the eurozone, Chinese economic concerns and the monetary tightening already implied by the gains in sterling this year suggest that rates could remain on hold until May 2016”.
“The approach to the first rate hike could bring increased volatility into the sterling market. However, we expect interest rate differentials to ensure that EUR/GBP continues to trend lower into 2016”.
Key Quotes
“In a July speech BoE Governor Carney commented that “the decision as to when to start such a process of adjustment [in interest rates] will likely come into sharper relief around the turn of this year”.
“The BoE is clearly preparing the ground for a rate hike in the foreseeable future and based on recent comments from MPC hawk Weale, it is likely that the committee’s monthly policy vote could be split as soon as August”.
“Insofar as the BoE along with the Fed are the only other major central banks preparing for an interest rate hike, we expect GBP and the USD to be the best performing G10 currencies in the coming months”.
“That said, slow growth in the eurozone, Chinese economic concerns and the monetary tightening already implied by the gains in sterling this year suggest that rates could remain on hold until May 2016”.
“The approach to the first rate hike could bring increased volatility into the sterling market. However, we expect interest rate differentials to ensure that EUR/GBP continues to trend lower into 2016”.