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FOREX: Sterling Underperforming Amid USD Correction, GS Recommend Short EUR/GBP

FOREX
BulletMarketsForeign Exchange Bullets
  • Despite the Ice dollar index slipping 0.5% on the Bessent selection, higher beta G10 currencies (mainly AUD & CAD) have underperformed the move, and this relative weakness has enabled EUR crosses to partially unwind the steep losses from late last week. EURGBP has not been immune, rising 0.3% to reach a high print of 0.8346.
  • Attention remains on a bullish engulfing candle pattern on Nov 12 that highlights a possible reversal for EURGBP, however, the cross remains below resistance of both the 50-day EMA and 0.8376, the Nov 19 high. The key technical level on the downside remains 0.8260, the Nov 11 low and the bear trigger.
  • Goldman Sachs see upside in long Sterling expressions versus EUR and Euro-sensitive currencies like SEK, where the Pound should differentiate itself a bit more on a divergence in domestic prospects including Goldman’s expectation for growth outperformance and an asymmetric impact from US tariffs. With that said, GS recommend investors go short EURGBP with a target of 0.8210 and a stop of 0.8420.v
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  • Despite the Ice dollar index slipping 0.5% on the Bessent selection, higher beta G10 currencies (mainly AUD & CAD) have underperformed the move, and this relative weakness has enabled EUR crosses to partially unwind the steep losses from late last week. EURGBP has not been immune, rising 0.3% to reach a high print of 0.8346.
  • Attention remains on a bullish engulfing candle pattern on Nov 12 that highlights a possible reversal for EURGBP, however, the cross remains below resistance of both the 50-day EMA and 0.8376, the Nov 19 high. The key technical level on the downside remains 0.8260, the Nov 11 low and the bear trigger.
  • Goldman Sachs see upside in long Sterling expressions versus EUR and Euro-sensitive currencies like SEK, where the Pound should differentiate itself a bit more on a divergence in domestic prospects including Goldman’s expectation for growth outperformance and an asymmetric impact from US tariffs. With that said, GS recommend investors go short EURGBP with a target of 0.8210 and a stop of 0.8420.v