EUR/GBP remains a ‘sell on rallies’ ahead of BoE – Danske Bank

Analyst Mathias Mogensen at Danske Bank noted occasional upticks in the European cross could be considered as selling opportunities.

Key Quotes

“EUR/GBP continues to hover just above the 0.87 figure. A break below this level could potentially open up for a test of the low end of the broad range at 0.8650”.

“UK data prints tomorrow (NIESR GDP estimate, industrial and manufacturing production data) are unlikely to change the market’s expectations of a rate hike from the BoE in May and the GBP is likely to remain underpinned ahead of the BoE meeting on 10 May”.

“Note, however, that speculative positioning is stretched long GBP at the highest level since 2014, according to the latest IMM data, indicating that the GBP might be relatively sensitive to negative news and profit takings etc. Tactically, we prefer to sell EUR/GBP on rallies ahead of the BoE meeting”.