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13 Mar 2015
EUR/GBP to continue lower in to 2016 - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted that the UK Chancellor of the Exchequer will outline the last budget ahead of the May 7 general election next week.
Key Quotes:
"Just a few months ago this budget had been dismissed as a damp squib since it was assumed that the government would be too far behind its deficit target to release any pre-election sweeteners."
"Revisions to the first nine months of the fiscal year and a large January surplus mean that the budget outlook has since improved. Speculation that the Chancellor could have some room for electioneering in the budget has thus increased. Even so, with the two main UK political parties still neck and neck in the polls, talk of hung parliaments, king makers, a second election and even a grand coalition are likely to persist."
"In view of the wide range of political uncertainty, there is the risk that sterling could come under pressure ahead of the election. To date there has been little sign of jitters and we argue that these concerns have been stifled by the relative attraction of the sterling interest rate curve."
"While GBP could stutter on a 1 to 3 mth view on the back of political uncertainties we expect that EUR/GBP will continue its trend lower into 2016."
Key Quotes:
"Just a few months ago this budget had been dismissed as a damp squib since it was assumed that the government would be too far behind its deficit target to release any pre-election sweeteners."
"Revisions to the first nine months of the fiscal year and a large January surplus mean that the budget outlook has since improved. Speculation that the Chancellor could have some room for electioneering in the budget has thus increased. Even so, with the two main UK political parties still neck and neck in the polls, talk of hung parliaments, king makers, a second election and even a grand coalition are likely to persist."
"In view of the wide range of political uncertainty, there is the risk that sterling could come under pressure ahead of the election. To date there has been little sign of jitters and we argue that these concerns have been stifled by the relative attraction of the sterling interest rate curve."
"While GBP could stutter on a 1 to 3 mth view on the back of political uncertainties we expect that EUR/GBP will continue its trend lower into 2016."