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15 May 2014
EUR/GBP potential for deeper pullbacks - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, expects the cross to accelerate its decline in the coming periods...
Key quotes
"Yesterday's UK labour market data and Inflation Report presented BOE Governor Mark Carney with an opportunity to talk down rate hike expectations, and he had more success than I had expected. The Inflation Report basically suggests the MPC will hike rates no faster than the pace priced in to the interest rate market."
"The press conference suggested that the Governor will continue to resist pressure for a hike in 2014. The average earnings data continue to suggest that falling unemployment is doing very little to put any upward pressure on wage growth."
"And the 2.4% annual rate of growth in employment in Q1 is 0.7% per annum faster than in the US and clearly enough to continue to drive a 3%+ growth rate in GDP for now. I was scared of a data-driven spike higher in GBP/USD through 1.70 and am relieved that it has been avoided. It's still going to be a very gradual turn lower and indeed, this side of the June ECB meeting, there is still a good chance that EUR/GBP drifts lower."
Key quotes
"Yesterday's UK labour market data and Inflation Report presented BOE Governor Mark Carney with an opportunity to talk down rate hike expectations, and he had more success than I had expected. The Inflation Report basically suggests the MPC will hike rates no faster than the pace priced in to the interest rate market."
"The press conference suggested that the Governor will continue to resist pressure for a hike in 2014. The average earnings data continue to suggest that falling unemployment is doing very little to put any upward pressure on wage growth."
"And the 2.4% annual rate of growth in employment in Q1 is 0.7% per annum faster than in the US and clearly enough to continue to drive a 3%+ growth rate in GDP for now. I was scared of a data-driven spike higher in GBP/USD through 1.70 and am relieved that it has been avoided. It's still going to be a very gradual turn lower and indeed, this side of the June ECB meeting, there is still a good chance that EUR/GBP drifts lower."