Core Viewpoint - The recent appreciation of the British pound against the euro may not be sustainable due to the potential for the Bank of England to lower interest rates earlier than the market expects [1] Group 1: Interest Rate Outlook - The Bank of England is likely to cut interest rates again in March, which could lead to a gradual decline in the GBP/EUR exchange rate over the coming months [1] - Market data indicates that a rate cut before June has not been fully priced in by investors [1] Group 2: Exchange Rate Analysis - The GBP/EUR exchange rate has fallen below 0.8700, which is considered a short-term moderate undervaluation according to the analysis model [1]

Group 1 - The core viewpoint is that the probability of the domestic central bank following the Federal Reserve in cutting interest rates has increased, with a higher likelihood of implementation after the end of October [1][4] - External constraints are weakening, creating a "maneuvering space" for monetary policy, as the narrowing of the China-US interest rate differential reduces the risk of capital outflow, thus opening a window for monetary easing [2] - The current low net interest margin of commercial banks and rising real interest rates pose internal constraints on further interest rate cuts, making the central bank cautious about comprehensive rate reductions [3] Group 2 - The bond market is showing signs of stabilization after three months of adjustments, and there is an expectation for a new round of smooth declines in bond market rates entering the fourth quarter [1][4] - Investors are advised to prepare for defensive strategies and consider entering the market around the 10-year government bond yield of 1.8% [1][4]