Central Banks

SG on the BoE – “not at all trying to suppress GBP strength”

Société Générale on EUR/GBP and what to expect – touching on both European Central Bank and Bank of England in the remarks

(bolding mine)

  • EUR/GBP trading range has continued to narrow over the past two weeks or so …

  • Marrying the economic narrative to the chart and bringing the ECB into the equation either means that EUR/GBP is set to rebound to 0.90 as the ECB fails to rein in EUR bulls or that Draghi succeeds in repelling another tidal wave of EUR buying and elicits a mean reversal.
  • Brexit discussions covering UK/EU trade have yet to resume and will probably have a peripheral impact for now.
  • The BoE on the other hand is not at all trying to suppress GBP strength (more so vs USD than trade weighted), which at the margin takes some pressure off the BoE to raise rates again should the base-case scenario of faster wage growth and a trade deal with the EU materialise.

EUR/GBP daily chart:

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USDJPY continues its fall lower. Range for the day is larger than the range from last week’s trading.

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