With the Brexit deadline just over a month away, what is the outlook for EUR/GBP?
Here is their view, courtesy of eFXdata:
Danske Research adopts a bearish GBP bias and prefers to express that via an options structure.
“Near-term, we expect a repricing of the Brexit risk premium ahead of the 1 July deadline to send EUR/GBP higher again. We believe this will mirror similar events in late 2018 and summer 2019,” Danske notes.
“We like to express our tactical bearish GBP view via options, which we believe allows for attractive risk-reward. Specifically, we recommend entering a 2M EUR/GBP 1×2 ATMS call spread with strikes of 0.8910 and 0.9070, respectively,” Danske adds.