Senior Analyst at Danske Bank Pernille Henneberg sees the cross entering in the overbought territory following the recent rally.
Key Quotes
“The GBP also suffered substantially yesterday both against the EUR and USD and according to our short-term financial models EUR/GBP now trades in overbought territory, 1.2 standard deviation above the model’s estimate of 0.7260”.
“Strategically we still like to be long GBP due to the very low Bank of England rate hike expectations for the coming 12 months (first full 25bp rate hike priced in November 2016), which we still think is out sync with the strong labour market”.
“However, while the recent move higher indeed looks like an attractive selling opportunity, we think that the recent decline in the oil price and current poor risk environment will weigh substantially on Bank of England’s overall assessment, thus increasing the odds that the Bank of England is likely to maintain a fairly dovish stance at its meeting on 10 December”.
Key Quotes
“The GBP also suffered substantially yesterday both against the EUR and USD and according to our short-term financial models EUR/GBP now trades in overbought territory, 1.2 standard deviation above the model’s estimate of 0.7260”.
“Strategically we still like to be long GBP due to the very low Bank of England rate hike expectations for the coming 12 months (first full 25bp rate hike priced in November 2016), which we still think is out sync with the strong labour market”.
“However, while the recent move higher indeed looks like an attractive selling opportunity, we think that the recent decline in the oil price and current poor risk environment will weigh substantially on Bank of England’s overall assessment, thus increasing the odds that the Bank of England is likely to maintain a fairly dovish stance at its meeting on 10 December”.
