The Euro will weaken against the GBP
Summary
The European Central Bank (ECB) will likely cut rates before The Bank of England (BOE), meaning potential downside on EURGBP.
The Details
European interest rate hikes have been successful - Euro Area inflation is around 2%. Mission accomplished.
Easing rates is the next step after holding the current rate for a while. Cutting rates will weaken the Euro. European economic figures are poor, which adds conviction to rate cuts in the near future.
On the other hand, the BOE will likely keep higher rates for longer. There may even be a final rate hike by the BOE. Inflation is still above 3%. Cutting rates anytime soon could be seen as irresponsible and is not likely.
I expect EURGBP to reach weekly range support at 0.8250 in 2024. Price may even break the range support area.
Things to Consider
The European Central Bank (ECB) will likely cut rates before The Bank of England (BOE), meaning potential downside on EURGBP.
The Details
European interest rate hikes have been successful - Euro Area inflation is around 2%. Mission accomplished.
Easing rates is the next step after holding the current rate for a while. Cutting rates will weaken the Euro. European economic figures are poor, which adds conviction to rate cuts in the near future.
On the other hand, the BOE will likely keep higher rates for longer. There may even be a final rate hike by the BOE. Inflation is still above 3%. Cutting rates anytime soon could be seen as irresponsible and is not likely.
I expect EURGBP to reach weekly range support at 0.8250 in 2024. Price may even break the range support area.
Things to Consider
- If the UK also signals recession, pressure to cut rates will increase. However, inflation should be the primary influence on rate decisions.
- EURGBP could move higher before it starts declining.