Week ahead: GBP a big mover; news on EUR sell-off & USD revival (Credit Agricole)

Credit Agricole CIB FX Strategy Research discusses the outlook for GBP, USD, and EUR for the coming week.

On the GBP front, CACIB notes that the currency will be among the big movers ahead of the BoE’s inflation report

"We are more constructive on GBP and expect the BoE to signal it is ready to hike rates again to fight any persistent inflation overshoot on the back of renewed GBP weakness," CACIB argues.

On the EUR front, CACIB notes that the single currency sold off when the ECB extended its QE programme this week.

"The lack of significant dovish surprises, however, could see EUR stabilising before long, as investors turn their attention to the improving Eurozone data," CACIB adds. In its portfolio, CACIB maintains  long EUR/USD, and long EUR/CHF.

Lastly, on the USD front, CACIB  notes that the big theme in the forex markets in recent weeks has been the revival of the USD-rally.

"We are hesitant to jump on the USD bandwagon again and do not expect the currency to strengthen back to its cycle highs," CACIB argues.