So, if the EURGBP is climbing, this means that the strength of the EUR versus the USD is greater than the strength of the GBP versus the USD. Likewise, if the EURGBP is falling, the strength of the GBP versus USD is greater than the strength of the EUR versus USD. This can also be flipped:
1) if the EURUSD is falling slower than the GBPUSD, the EURGBP will rise.
2) if the GBPUSD is falling slower than the EURUSD, the EURGBP will fall.
Doesn't answer my question at all. Why should hawkish news from the Fed mean that the EUR should be strong against the USD more than the GBP is against the USD?
I think the answer is that GBP is seen as something of a risk asset these days given all the Brexit/DUP problems and BoE ineffectuality. So dollar up means risk off, means GBP down.
I guess you answered your own question…but today’s move of the GBPUSD versus EURUSD negates your “risk on/off” hypothesis as evident by the falling EURGBP (i.e., GBP is moving stronger than the EUR against the USD).
Depends whether you consider yesterday to have been a risk on day. The dollar came down and the EUR/GBP also fell, so it seems the correlation holds. If yesterday was a risk on day then it seems that explains the movements. If it was another risk-off day then it must be something else.
