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At the end of last week, the UK press and the financial markets were readying themselves for an imminent post-Brexit trade deal between the UK and the EU. Following disappointing news over the weekend, by this morning expectations had re-grouped and the pound had adjusted lower. Jane Foley, Senior FX Strategist at Rabobank forecast EUR/GBP at 0.88/0.89 on a Brexit deal and at 0.93 on a no-deal outcome.

Key quotes

“A relief rally is likely this week if politicians manage to produce some kind of trade agreement. We see the potential for EUR/GBP to dip a little below 0.88 and for cable to take another run at the upside on this outcome However, we are not optimistic that a relief rally will be sustained.” 

“If a deal is struck, we see EUR/GBP trading in the 0.88/0.89 area in the months ahead. On a no-deal outcome, we expect to see a spike in EUR/GBP to the 0.93 area.”