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In opinion of Aila Mihr, Analyst at Danske Bank, dips in the European cross should be considered as buying opportunities.

Key Quotes

“Appetite for GBP has improved following the Conservative Party Congress, as Theresa May managed to leave the congress without any new troubles. EUR/GBP has traded lower the last two session and the cross currently flirts with the 200d moving average line at 0.88416. A clean break below this line could potentially induce more EUR/GBP selling near term”.

“In terms of Brexit, the UK and the EU are expected to restart negotiations today and EU leaders will also discuss Brexit over dinner on the eve of the EU summit on 18 October. However, it is not likely nor expected that an agreement will be reached at the EU summit in October. It is more likely to happen at the extraordinary EU summit on Brexit in mid-November or at the ordinary EU summit in December”.

“Hence, we expect EUR/GBP to remain volatile but range bound near term as Brexit negotiations continue, and tactically, we would look for opportunities to buy EUR/GBP on dips for a short-term rebound”.