EUR/GBP: headed to below 0.85; Trump is good for UK & Brexit - BTMU

Analysts at Bank of Tokyo Mitsubishi explained that, in respct of the poun, Trump is good for the UK & Brexit.

Key Quotes:

"We were not surprised to see the pound outperform yesterday with a notable move lower in EUR/GBP.

We are forecasting EUR/GBP trading below 0.8500 next year and while this forecast was based on other factors, Trump in the White House will help the pound.

Of course, the UK is no longer “at the back of the queue” in terms of a trade deal with the US while more importantly the UK Brexit vote will no longer be viewed as some kind of outlier vote but perhaps the beginning of a global shift towards more populist voting.

The fall in EUR/GBP should then be viewed as a sign of a shift of the political risk premium from the UK to Europe.

Given what lies ahead in Europe over the coming twelve months and given the Brexit and Trump votes, there is understandable justification for a greater political risk premium being priced into the euro."