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EUR/GBP steps back from long-term lows
Sterling enjoyed the holiday period as it rivalled the aussie as the leading G10 currency. There was some relief in the UK that the new Omicron variant won’t lead to severe restrictions, even allowing for record infections. After the surprise rate rise by the BoE, money market traders have also piled on bets of more increases over the next year. The early start to the rate hike cycle will see rates climb to 1.25% with four 25bp increases expected, spread broadly across this year. This should keep GBP supported over the next few months. Although this pricing seems aggressive, it stands in contrast to the ECB who are ... (full story)