The bank are not as bearish on the euro as some are, and are also bullish on the GBP
Morgan Stanley say the EUR weakness is limited
- Material EUR weakness is fundamentally limited
- Despite Italian debt dynamics FX hedging of European exposures has already increased
- High hedge ratios suggest that European asset liquidation has a limited FX impact
- This explains why EUR crosses like EURJPY and EURCHF have remained relatively stable
MS highlight GBP positivs and how this impacts on the euro cross:
- EURGBP is the exception as the Brexit outlook continues to improve after PM May modified her Chequers plan.
- We remain GBP bullish
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Comments from MS' weekly 'FX Pulse'
