Currency investors should consider selling EUR/GBP this week, advises Credit Suisse (SIX:CSGN) in its weekly FX pick to clients.
"Draghi's dovish comments reintroduce the potential for EUR downside, in our view. EUR has been supported by positioning unwind amid the new funding status of the currency. But IMM data suggest that this positioning unwind has already progressed quite a bit," CS notes.
"Additionally, EM weakness has historically depressed EUR via reserve managers selling EUR/USD to replenish USD reserves. This channel could with a lag start to weigh on the currency," CS argues.
"Meanwhile, we remain bullish GBP and forecast a bit stronger than expected rebound in IP combined with a relatively steady message from the BoE," CS projects
"We consider current EURGBP levels attractive," CS advises.