Piet P. H. Christiansen, senior analyst at Danske Bank, explains that GBP has performed strongly over the past two weeks as the risk of a ‘no deal’ Brexit appears to be declining.
Key Quotes
“We find the rally in GBP fair given that the post Brexit outcome distribution for EUR/GBP looks increasingly skewed towards the downside.”
“Focus for GBP this week will be on the House of Commons’ voting on Prime Minister Theresa May’s Brexit Plan B (and amendments) which takes place tomorrow.”
“We look for EUR/GBP to trade within the 0.86-0.89 range short term. Technically, EUR/GBP looks increasingly oversold with the 14 days relative strength index (RSI) trading below 30, and we reckon that it would require more than the approval of the Cooper amendment – either in the form of higher probability that a deal could be passed soon or a call for a 2nd referendum – to trigger a break below 0.86 at this stage.”
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