The GBP has been well supported of late, mainly due to investors’ BoE interest rate expectations stabilising. Although central bank members do not make a case for higher rates anytime soon, the same can be assumed when it comes to a more dovish policy stance.
This is especially true as the economy is expected to improve further. Indeed, BoE Chief Economist Hadane recently stressed that the recovery is taking hold quite nicely.
As noted and with the market not pricing in any easing over the coming 12 months, monetary policy prospects are unlikely to trigger any currency downside in the short-term.
As a result of the above outlined conditions we remain short EUR/GBP targeting a move towards 0.7150 over the coming few months.
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