Is There More EURGBP Downside Ahead?

Table of Contents

Table of Contents

The downside bias for the EURGBP has continued to pay dividends this past week, as the pair has remains pressured at nine month lows (near the 0.8750 price level).

If you haven’t been able to take advantage of the bearish bias alongside us, don’t worry.

There are a few events to watch in the week ahead which could give opportunities to do so.

The downside bias started with initial comments from Governor Bailey when he pushed back against NIRP on the 12th of January.

Following that, there have been numerous other short-term drivers pushing the pair lower, such as a rapid decrease in COVID-19 cases in the UK, as well as last week’s BOE meeting.

The central bank ticked both the bullish boxes by upgrading their growth outlook for 2021 – and also pushing back firmly against Negative Interest Rates.

One of the biggest positive drivers for the GBP – apart from monetary policy – has been the UK’s programme.

As we’ve highlighted in our videos and reports over the past few weeks, this successful vaccine rollout placed the UK in an attractive position to hit the ground running after lockdowns are lifted. It also bodes well for the UK economy in terms of relative growth dynamics.

On Friday, the recent Q4 GDP data provided another textbook example of the short-term sentiment and technicals aligning with the mid-term fundamental outlook.

In the week ahead, we’ll be looking at incoming economic data and possible lockdown news in line with the current bearish bias.

Highlights of the video:

00:28 – Current baseline

03:26 – Baseline expectations for the upcoming week

05:55 – Sentiment shifts and trade plan

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