We enter a EUR/CHF EUR/GBP dual digital to take advantage of top down and bottom up themes in European regional FX. At the top down level, we believe the euro bullish themes around the sea change in fiscal policy, favourable equity rotation dynamics and greenshoots in growth are durable. Risks come from Eurozone tariffs, so we optionalise exposure to have staying power. Swiss domiciled investor allocations to European assets have been lacking for over a decade, and this should start to shift going forward in our view, pushing EUR/CHF towards parity at least. Short term risks for GBP are around the late March OBR forecast update, where the relative fiscal stance between EUR and GBP can gain focus and push EUR/GBP higher, at a time where spot still trades cheap to fair value. We also challenge the consensus and see the broader tariff agenda as bullish for EUR/GBP over the medium term given the pressure that spillover effects place on UK fiscal maths. - J.P. Morgan Strategy
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