EUR/GBP may make a dash towards 0.86 - ING

Viraj Patel, Research Analyst at ING, explains that the ZEW survey of EZ growth expectations fell to its lowest level since July 2016 (post-Brexit), which may be a fairly ominous sign of what to expect at the April ECB meeting.

Key Quotes

“The next set of PMI releases early next week will be crucial to see if EZ business activity is also suffering from a short-term dip in confidence owing to a shaky geopolitical backdrop. Ahead of this, we’ll get EZ CPI data today (final release for March). We also get the latest UK CPI data; worth noting that in this post-Brexit environment UK inflation data tends to send an ambiguous signal for markets – with higher inflation not necessarily GBP positive (need to balance possible BoE tightening risks with weaker activity due to a further squeeze in UK household incomes). Bar a huge CPI miss, look for GBP to stay resilient at these elevated levels; risks are that EUR/GBP makes another dash lower towards 0.86.”