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May 10 - 09:55 AM

EUR/USD: The Euro Is 'Cheap' But Unbuyable; GBP/USD: Sterling Is An Easier Short - SocGen

By eFXdata  —  May 10 - 09:04 AM
Societe Generale Research discusses the near-term outlook for EUR/USD and GBP/USD. 
 
"GBP/USD failed to hold below 1.2270 and bounced but couldn’t stay above 1.24. Hardly impressive and the market’s collective trading strategy for both will be ‘sell the rally’. Sterling is the easier short, because the rate hikes are priced in, the slowdown is happening before our eyes and the political backdrop is a threat to sterling, too. But doubt GBP/USD can really decouple from EUR/USD," SocGen notes.
 
"The bottom line is that we can’t accurately price the risk of a disruption to Europe’s gas supplies, but if it happened, the risk of EUR/USD breaking parity would be substantial, and that keeps the natural urge to start building a long-term position in euros at bay...The euro is 'cheap' but unbuyable; The Australian dollar even cheaper, but we're in a risk-off market, with a Chinese slowdown for company," SocGen adds. 

 

Source:
Société Générale Research/Market Commentary

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