Snapshot: EUR/GBP currently trades at 0.8670, up 0.10% on the day. The dominant driver remains the divergence in central bank outlooks, with the BoE perceived as increasingly likely to cut rates sooner than the ECB. Today’s ECB surveys provide little impetus for a change in outlook.
- Watch for resistance around 0.8678, the day’s high, a break of which would open up a test of recent ranges.
- Risk: A surprise hawkish signal from the BoE in the coming weeks, potentially pushing back against rate cut expectations.
Bias into NY: We favour further upside in EUR/GBP towards 0.8700 as the market continues to price in a more dovish BoE relative to the ECB. DXY strength and higher US yields could temper the move but are secondary to the central bank divergence.