EUR/GBP sell rallies above 0.8850 – Danske Bank

Senior Analyst at Danske Bank Kristoffer Lomholt recommended selling the cross on occasional upticks beyond 0.8850.

Key Quotes

“Focus this week for GBP is the series of UK PMI data, which will be the last important data releases before the Bank of England meeting on 10 May. EUR/GBP trades just below the 0.88 level, and today’s UK Manufacturing PMI is not likely to cause much volatility. Most importantly is the Services PMI (due on Thursday), where we rebound to 53 after last month’s sharp decline to 51.7. However, we reckon that it probably will require a significant upside surprise in order to keep prospects of a May rate hike from the BoE alive”.

“Hence, we see EUR/GBP mostly around the 0.88 level this week with risks skewed to the upside. Longer term, we still expect EUR/GBP to trade lower, targeting 0.84 in 6M and 0.83 in 12M. Tactically, we would consider selling on rallies above 0.8850”.