Synopsis:

SocGen recommends a range-trading strategy for EUR/GBP, favoring buying on dips and selling on rallies, as the pair remains anchored in its established range despite broader European FX strength.

Key Points:

• Top Performing Currencies:

  • Since late January, SEK, CHF, EUR, and NOK have been the strongest G10 performers, reflecting broad European FX momentum.

  • CHF strength is more fragile, as any successful Trump-led ceasefire in Ukraine could erode its safe-haven appeal.

• Outlook for GBP:

  • GBP is expected to weaken in episodes of risk aversion, but remains supported over the medium term by expectations of more accommodative UK fiscal policy.

  • Overall, GBP is seen as range-bound with no imminent breakout anticipated.

• EUR/GBP Strategy:

  • Buy on dips and sell on rallies is preferred in EUR/GBP, without expecting a major trend shift.

  • The pair is likely to remain in a broad range, reflecting relative balance in fiscal and growth outlooks for both the eurozone and UK.

Conclusion:
S

ocGen sees no fundamental catalyst for a sustained breakout in EUR/GBP, and recommends range-trading strategies to capitalize on short-term moves. European currencies continue to outperform broadly, but GBP remains resilient in its own right, reinforcing the case for a mean-reverting approach.