CitiFX Research discusses EUR/GBP outlook and trading strategy for the coming year.
"The BoE have not hit peak dovishness unlike the ECB where guidance may have to shift hawkish.
Tough spot trade: headline risk and may rumble on until it blows. We prefer options to participate in a potential move," Citi argues.
In line with this view, Citi Research recommends being long EUR/GBP via option: "a 12m 0.95/1.00 call spread could be attractive. “Sufficient progress” likely gives GBP a boost allowing a good entry point for this trade," Citi advises.
Source: Citi Research