Jens Peter Sørensen, senior analyst at Danske Bank, suggests that EUR/GBP remains mainly unaffected after UK PM, Theresa May, presented her Plan B for Brexit as it did not offer much news in terms of the future path for Brexit.
Key Quotes
“All options are still on the table, including a second referendum, which the Labour party according to the media is said to be proposing to parliament. Voting on Plan B and other amendments will take place on 29 January. With an extension of Article 50 looking increasingly likely and parliament seeking to take over the Brexit process and thereby reducing the risk of a ‘no deal’ Brexit, the post-Brexit outcome distribution for EUR/GBP looks increasingly skewed towards the downside.”
“Appetite for GBP has generally improved and implied GBP FX volatility (Brexit risk premium) has declined significantly. We reckon that the range for EUR/GBP may have shifted lower and we now see the cross within the 0.86-0.89 range near term (previous range: 0.88-0.9060).”
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