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Societe Generale sees second ECB hike priced, third at 2.75% unlikely

The firm flags that a move to 2.75% by February would require stronger Eurozone growth and renewed evidence of second-round inflation effects.

Reported · Written up by our desk · Central Banks

Societe Generale strategists say the July selloff in global fixed income markets looks overstretched, with Western Europe seeing 2-year and 10-year yields rise by about 30 basis points over the past four weeks.

In their view, a second ECB rate hike in September is already priced into markets, but they consider a third move to 2.75% by February to be a stretch unless Eurozone growth and second-round inflation impacts strengthen materially.

FXStreet also notes that, amid broader European rate expectations, GBP/USD has been hovering near monthly lows around 1.3300, while EUR/USD has slipped back below the 1.1400 region early in the week.

The outlet links some near-term currency positioning to softer UK inflation data and a de-escalation in the Middle East that has supported risk sentiment, even as uncertainty remains around the US and Iran finding a lasting solution.

Latest closeEUR/USD 1.122 ▼0.3%|GBP/USD 1.323 ▼0.3%

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