CIBC FX Strategy Research makes the case for further EUR/GBP gains targeting 0.90 in Q3.
“In his last press conference, ECB President Draghi dampened expectations for a policy shift slightly by noting that wage growth and core inflation remained weak. While that’s true, recent data suggest a much more stable trend in labour costs than elsewhere.
In the UK, for example, we’ve seen a decelerating trend since the start of the year, which is particularly concerning given that CPI inflation has accelerated.
So even with more hawkish dissents from BoE voters this week, we still see the ECB withdrawing stimulus earlier and the euro to appreciate versus sterling,” CIBC argues.
Source: CIBC Economics – CIBC Capital Markets
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