MUFG is out with its trade of the week and highlights EUR/GBP, which is trading at 0.8650 at the moment.

“We are recommending a long EUR/GBP trade idea to reflect our view that downside risks for the GBP are increasing. We have been encouraged by price action over the past week. EUR/GBP has held above the 0.8600-level for the longest period since late 2023/early 2024,” MUFG notes.

“The GBP sell-off was initially triggered by concerns last week over the UK public finances. The looming prospect of tax hikes in the autumn could discourage businesses and households from spending in the interim contributing to weak growth continuing in Q3,” MUFG adds.

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