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May 24 - 10:55 AM

EUR: As EUR/USD Bounces, The Easy Default For The Market Is To Buy EUR/GBP - SocGen

By eFXdata  —  May 24 - 09:30 AM
Societe Generale Research discusses the ongoing EUR bounce and likes long EUR/GBP exposure in the near-term.
"EUR/USD is at 1.07 on the back of Ukraine-related risk and the psot-2014 monetary policy regime. ‘Fair value’ on the basis of our end-2022 yield forecasts (3% in US 10s and 1.25% in Bunds) is 1.17. But we can’t airbrush the Ukraine risk out of the equation just because there have been no new developments in the war for the last few days. That’s like forgetting there’s an elephant in the room just because it hasn’t moved for a bit!," SocGen notes.
"The easy default for the market is to buy EUR/GBP. UK PMI data confirm what everyone can see – the UK economy, higher energy costs, monetary tightening and the drag on growth from post-Brexit trade arrangements, is in a bad way. As the market reacts to Christine Lagarde’s ECB Policy roadmap, it’s much easier to see sterling as the weakest currency in Europe," SocGen adds.
Société Générale Research/Market Commentary


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