The FX analysis team at Rabobank expects the euro to finally break the 0.9000 resistance area, extending to 0.9100 in one month’s time as the pound remains weighed by Brexit uncertainty.
Key quotes
“Although EUR/USD 0.90 has proved to be a difficult barrier for the pound to cross in the last few weeks, we are of the view that unless some positive news emerges from the Brexit talks soon that EUR/GBP could push towards the 0.91 area on a 1-month view.”
“Looking beyond the volatility of recent months GBP is still trading at weaker levels vs. both the EUR and the USD than at the start of the year. The return of Brexit concerns, the plummeting approval ratings of the government, and fear that the BoE may resort to negative interest rates are all part of the problem for the pound.”
“With no extension (of the transition period) likely and with the trade talks not progressing well, there would appear to be a strong risk that the UK and the EU will be trading on WTO terms at the start of next year.”
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