10 Jul 2015
Sterling remains in the defensive - KBC
FXStreet (Barcelona) - The KBC Bank Research Team offers the outlook for GBP/USD and EUR/GBP, expecting positive headlines on Greece to be the trigger to install shorts on the latter.
Key Quotes
“Yesterday, sterling found a new short‐term equilibrium after Wednesday’s setback (both against the dollar and the euro).The RICS house price balance was stronger than expected but there was no immediate (positive) impact on sterling. During the day, cable basically hovered sideways in a tight range around 1.54, digesting the losses of the previous two days. The decline in EUR/USD also weighted slightly on EUR/GBP with the pair sliding from levels slightly north of 0.72 yesterday morning to the 0.7175 area. However, this still suggests some underlying caution on sterling. EUR/GBP was/is still quite far away from the 0.71 level where it traded for quite a while. The BoE, as expected, left its policy unchanged and gave no assessment on the economy. For that we have to wait for the Minutes of the meeting (July 22).”
“Overnight, EUR/GBP joined the Greece‐driven rebound of EUR/USD. Cable also rebounds slightly, trading in the 1.54 area. Later today UK construction output and the trade balance will be published. We don’t expect these data to help sterling much to reverse recent weakness.”
“We had a cautious sell‐on‐upticks approach and expected EUR/GBP to drift lower in the 0.7483/0.7014 range. Since the end of last week, we turned more cautious on sterling as EUR/GBP neared the range bottom. We keep the working hypothesis that high profile news is needed to push EUR/GBP sustainably below 0.70.”
“Mid this week, EUR/GBP shorts finally took profit. This move can still go somewhat further. We wait for more return action higher in the range to install EUR/GBP shorts. Positive headlines on Greece might help.”
Key Quotes
“Yesterday, sterling found a new short‐term equilibrium after Wednesday’s setback (both against the dollar and the euro).The RICS house price balance was stronger than expected but there was no immediate (positive) impact on sterling. During the day, cable basically hovered sideways in a tight range around 1.54, digesting the losses of the previous two days. The decline in EUR/USD also weighted slightly on EUR/GBP with the pair sliding from levels slightly north of 0.72 yesterday morning to the 0.7175 area. However, this still suggests some underlying caution on sterling. EUR/GBP was/is still quite far away from the 0.71 level where it traded for quite a while. The BoE, as expected, left its policy unchanged and gave no assessment on the economy. For that we have to wait for the Minutes of the meeting (July 22).”
“Overnight, EUR/GBP joined the Greece‐driven rebound of EUR/USD. Cable also rebounds slightly, trading in the 1.54 area. Later today UK construction output and the trade balance will be published. We don’t expect these data to help sterling much to reverse recent weakness.”
“We had a cautious sell‐on‐upticks approach and expected EUR/GBP to drift lower in the 0.7483/0.7014 range. Since the end of last week, we turned more cautious on sterling as EUR/GBP neared the range bottom. We keep the working hypothesis that high profile news is needed to push EUR/GBP sustainably below 0.70.”
“Mid this week, EUR/GBP shorts finally took profit. This move can still go somewhat further. We wait for more return action higher in the range to install EUR/GBP shorts. Positive headlines on Greece might help.”