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Citi Projects EUR/GBP to Fall Below 0.86 on Technical Break
Summary
Analysts at Citi have noted a significant technical break in the EUR/GBP currency pair, forecasting a potential decline toward the 0.8450-0.85 range. The bearish outlook comes as the pair dropped below the key 0.86 level.
According to an analysis by Citi, the EUR/GBP currency pair has experienced a bearish technical break, falling below the significant 0.86 level. The bank suggests that this move could signal a further decline, potentially pushing the exchange rate toward a target range of 0.8450 to 0.8500.
Citi's forecast comes despite what it describes as bearish UK fundamentals. The bank has been monitoring foreign investment into UK government bonds, known as gilts, as a primary driver for the currency pair's direction. However, Citi noted that its proprietary data, which acts as a proxy for overseas gilt buying, has not yet shown sustained purchasing of the British pound.
Despite the lack of confirmation from investment flows, analysts at the bank believe the technical breakdown alone could support a tactical trade. Citi also highlighted the risk that market sentiment could begin to favor bets on the euro falling against the pound. The bank suggests the downward trend could have more room to run if the spot price continues to decrease.
AdThe currency pair reached what Citi termed "key levels" just ahead of potential market catalysts. The bank continues to view the flow of foreign capital into gilts as a crucial factor in determining the pair's future trajectory.