EUR/GBP: ECB cut before BoE would favour drop towards 0.8400 – SocGen

EUR/GBP finally bounces after testing 0.8500. Economists at Société Générale analyze the pair’s outlook.

A relief bounce is overdue

In the UK, inflation data came in a tad better than forecast but services ticked up to a 3-month high of 6.5%. That’s not going to aid confidence at the BoE.

EUR/GBP traded briefly below 0.8500 but a relief bounce is overdue. Targets will be lowered closer to 0.8400 if the ECB cuts rates before the BoE.

Inability to cross above 0.8550 can lead to persistence in downtrend. Next potential supports are at projections of 0.8455/0.8440 and 0.8385.