The euro-zone and UK economies have been going in different direction for quite a while, but the EUR/GBP cross has not been a one way street, to say the least.
Where is the pair headed next? Barclays has a clear answer.
Here is their view, courtesy of eFXnews:
Investors following tactical strategies should consider staying short EUR/GBP this week, advises Barclays Capital in its weekly FX pick to clients.
“Our economists pushed forward the timing of first hike by the BoE from November 2014 to February 2015, but our constructive view on the UK economy remains intact and we believe the market is pricing in too much dovishness from the BoE,” Barcalays says as a rationle behind this view.
“Our view on relative monetary policy between the BoE and ECB – that the former to start policy normalization while the latter to announce EGB QE in Q1 2015 suggests that EURGBP will continue to decline in coming months. Our forecast for Euro area and UK data this week is mixed relative to consensus, but we prefer selling EURGBP on any rallies,” Barclays adds.
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