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GBP: Cable Hits 1.30 Bull Trigger, EUR/GBP Pressured

GBP
  • GBP outperformance extends, pushing GBP/USD through 1.30 and keeping EUR/GBP under pressure and within range of key support.  
  • EUR/GBP remains under pressure on this morning's UK CPI print, weighed by the slight hawkish STIR repricing that now eyes ~7.5bps of cuts at the BoE's August meeting and fewer than two full 25bps cuts into year-end. We wrote last week that FX options markets were geared for further downside in the cross, evident in the popularity of put options and growing options-implied probability of lower levels for spot. The front-end of the risk reversals curve has remained under pressure as spot slips and the unwind of the French election risk premium evaporates - which may keep focus on further downside triggers in the cross. 
  • Any further weakness through key support at the YTD low printed last week at 0.8389 puts prices at lowest levels since March 2022 and exposes 0.8366, the 2.236 projection of the Apr 23 - 30 - May 9 price swing. 

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