UBS has expressed concerns about potential declines in the EUR/JPY and EUR/GBP currency pairs due to upcoming economic data. They emphasize the importance of indicators leading up to the European Central Bank (ECB) meeting.

The market has already taken into account the possibility of ECB rate cuts of at least 150 basis points over the next year. UBS cautions that volatility could arise from ECB President Christine Lagarde's press conference, particularly if she discusses risks related to future US tariffs or negative economic impacts in France. UBS expects more definitive signals about the euro's direction to come from data releases later in December, specifically the preliminary PMI data on December 16 and France's Insee survey on December 19. Weakness in these indicators could dampen inflation expectations and lead to increased market speculation on ECB rate cuts.

UBS maintains a bearish outlook on the euro, with a short position against the Japanese yen and a consistently negative stance on EUR/GBP. They anticipate three 25 basis point rate cuts by the Bank of England in 2025, but note that inflationary pressures in the UK may limit the potential for such cuts. UBS's long-term target for EUR/GBP is set at 0.8200, with the possibility of the pair falling below this level.