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EURGBP
- GBP strength persists in recent trade, helping tilt EUR/GBP to new YTD lows and close the gap with next key support at the 0.8547 December low. Technically worth noting that the 50- and 200-dmas are on the cusp of forming a death cross in the coming sessions, signalling short-term downward momentum.
- Move initially triggered by the wave of risk-on that followed China-US trade headlines (recall a piece in The Times yesterday: "US-China trade war would hurt Britain most, says leaked analysis" - so stands to reason that GBP would firm on smoother ties), with background support from the BRC shop price index overnight - while headline price rises accelerated, food inflation eased, driven by staples including milk and fish.
- Rate differentials also coming into play for the cross, with the BoE/ECB market implied peak rate spread rising to new extremes Tuesday - see chart below:
Figure 1: BoE/ECB Peak Rate Differential
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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