EUR/GBP: A PULLBACK TO 0.8400-0.8500 RANGE BECOMES A DISTINCT POSSIBILITY FOR FIRST TIME SINCE 2022 – SOCGEN

EUR/GBP skids to six-month low of 0.8511. Economists at Société Générale analyze the pair’s outlook.

UK wages reinforce BoE caution

The BoE two weeks ago mentioned, like the Fed, it does not have the confidence yet on inflation to cut rates. That won’t change after earnings ex-bonuses slowed in December to 6.2% 3m/YoY, above forecast of 6.0%. November was revised up by 0.1ppt to 6.7%. 

Employment rose by 72K. Payrolls, a notoriously volatile data series, expanded by 48K in January. December was revised up to 31K. 

For EUR/GBP, a pullback to the 0.8400-0.8500 range becomes a distinct possibility for the first time since 2022.