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At Societe Generale, we were expecting the Cable to move to 1.20 by the end of the first quarter, though it seems now that it had definitely reached the abovementioned level much faster than our prediction. Still, the pair is definitely going the same direction as we have forecast.
At this point, our view is that the ongoing Sterling pressure is likely to continue because our expectation is that the US Dollar will remain on an uptrend. Despite that, we suppose that the low that we saw in the GBP/USD currency pair in October last year is the cyclical low and it will not breach below the level of 1.15. Our current view is that this low will hold for the time being.
What would be your forecast for EUR/GBP for the Q1 of 2017?
In our forecasts that were published in December last year, we were looking for 0.84, though now we can see that it has actually bounced a little bit higher than that. At the current moment, we do think that pressure on the Euro will intensify as we get closer to the French elections in spring and then it will come off again.