Cable set for 1.20 if EUR/USD falls to parity
Nov 25 (Reuters) -With the UK Labour government's honeymoon period long since over, the probability of GBP/USD sliding to 1.20 for the first time since March, 2023 will increase if EUR/USD drops to 1.00.
Cable and EUR/USD both fell heavily on Friday, to respective 28-week and two-year lows of 1.2475 and 1.0332 (EBS), courtesy of euro zone and UK PMI data misses.
Friday's sub-50 UK November PMI print came hot-on-the-heels of worse than expected UK retail sales data for October, and seven days after the disclosure that the UK economy unexpectedly contracted in September.
The UK data disappointments lessen the chance of GBP/USD being able to resist new downward pressure exerted by any additional EUR/USD losses.
Cable and EUR/USD met headwinds around the 1.26 and 1.05 former support levels on Monday after pushing their recovery envelopes from Friday's lows as UST yields fell on news that fiscal hawk Scott Bessent had been chosen by Donald Trump to be his Treasury secretary.
Bessent has voiced support for a strong dollar, so the EUR/USD and GBP/USD revivals may prove fleeting.
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Robert Howard is a Reuters market analyst. The views expressed are his own, editing by Ed Osmond
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