According to analysts from Danske Bank, EUR/GBP will likely trade within 0.90-0.92 until a Brexit deal is agreed. As they expect an agreement in November, the EUR/GBP three-month forecast has been lowered to 0.86.
Key quotes
“In line with our expectations, there has not been any major breakthrough ahead of the EU summit on 15-16 October. Our base case remains a deal but we expect negotiations to extend into November. The main obstacles are still fishing and level playing field conditions (e.g. state aid and taxes).”
“A hit to global risk sentiment could hurt the GBP as sterling has been trading very much as a cyclical currency this year. A restart of the reflation trade may limit how much the GBP weakens due to increasing Brexit fears near-term.”
“We expect EUR/GBP to trade within 0.90-0.92 until we get clarification on Brexit. Our base case remains a simple free trade agreement covering goods and we expect the cross to move lower to around 0.86 when a deal is in sight. We have lowered our three-month forecast to 0.86 (previously 0.88), as we expect a deal some time in November. We keep our six-to-twelve month forecast at 0.86.”
Share
