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Chief Strategist at Danske Bank Valtteri Ahti assessed the recent price action around the British Pound.

Key Quotes

“GBP gained substantially yesterday initially driven by month-end flows and likely also positioning ahead of the Bank of England meeting today. Overnight, EUR/GBP took another steep decline to 0.88165 on positive Brexit news posted by a letter from UK Brexit Secretary Dominic Raab, saying that that UK banks will get continued access to the EU markets after Brexit and that he expects a deal to be reached on 21 November”.

“Brexit remains the key driver for GBP and we still expect EUR/GBP to remain very volatile with risks skewed to the upside until a deal is reached. Given the recent weakness in UK growth data and not least weak growth and activity data in the eurozone and China this week, we see expect the BoE to strike a somewhat more cautious tone today, stressing that future rate hikes in the UK depend on data. If we are right on the BoE, this could be the catalyst for a rebound in EUR/GBP today”.