EUR/GBP may struggle to find sustainable support above 0.8600 for now
We expect some 100 bps of BoE cuts this year. Since we also deem ECB rate cut bets as too aggressive, we are bullish on EUR/GBP into year-end. However, we think that the back up in EUR rates will be gradual and markets will be reluctant to let go of high-yielding GBP longs so close to the surprise December CPI print.
Accordingly, EUR/GBP may struggle to find sustainable support above 0.8600 for now. The 0.8640 is where 50, 100 and 200-Day Moving Averages converge, and could be the next big resistance.