EUR/GBP seen at parity on no deal Brexit on October 31 – Rabobank

According to analysts from Rabobank, the direction of EUR/GBP will be decided by the Brexit outcome. A guarantee that no deal Brexit won’t happen, could boost the Pound, sending the pair toward 0.90.  

Key Quotes:  

“If legislation to rule out a no deal Brexit is rushed through parliament, the pound can be expected to rise. If it were decided that the Brexit deadline were to be extended but that the legal default position of the UK remains that a no deal Brexit could still take place at a future date, GBP may also rise, but by a lesser amount – since kicking the can down the road is not a solution. In this scenario we would expect EUR/GBP to be trading in the 0.90 area on a 1 to 3 month horizon.”

“If a no deal Brexit is ruled out will would expect EUR/GBP to clamber back towards the 0.86 area in 3 months. If fresh legislation is not passed and the UK remains on course for a no deal Brexit in October we would expect EUR/GBP to rise firstly back towards the recent high in the 0.9325 area. How high EUR/GBP can go may then depend on whether the EU summit in mid-October brings any compromises.”

“On a no deal Brexit on October 31, we expect EUR/GBP to rise towards parity.”