EUR/GBP: Striking difference, bearish on quant signal and macro outlook - Credit Agricole

Credit Agricole CIB Research is bearish EUR/GBP over the coming weeks.

"While EUR/GBP continues to trade range-bound and seems unable to break below the 0.87 level, we think that the risks for the pair have shifted to the downside in recent weeks. According to our FAST FX model, which is based on short-term rate spread Spread The spread is the difference between two things. Generally, the spread is referred to the bid and the ask spread (also called the bid and the offer), which is the difference between the price at which you can sell an asset (bid) and the price at which you can buy it (ask). Spreads ExplainedFor example, if you see that the EUR/USD pair has a bid at 1.1001 and an ask at 1.1002, that means that the spread is 1 pip or 0.0001. So, you can buy it at 1.1002 and sell it at 1.1001. The brokers you are tr The spread is the difference between two things. Generally, the spread is referred to the bid and the ask spread (also called the bid and the offer), which is the difference between the price at which you can sell an asset (bid) and the price at which you can buy it (ask). Spreads ExplainedFor example, if you see that the EUR/USD pair has a bid at 1.1001 and an ask at 1.1002, that means that the spread is 1 pip or 0.0001. So, you can buy it at 1.1002 and sell it at 1.1001. The brokers you are tr Read this Term, peripheral yield spread to Bunds and a proxy for risk appetite among other drivers sold the overvalued EUR/GBP targeting a move towards a short-term fair value of 0.8670," CACIB notes.

"Indeed, we think that the fundamental outlook for the EUR may have taken a turn for the worse.. In contrast, the UK outlook seems to be gradually improving following the ‘winter of discontent’, which saw the economy plagued by strikes, a cost of living crisis and persistent Brexit uncertainty," CACIB adds.

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