GBP remains under pressure, EUR/GBP at 0.88 in 3-month – Danske Bank

Analyst at Danske Bank Thomas Rosenlund sees the European cross returning to the 0.8800 region within the next 3-months.

Key Quotes

“EUR/GBP has stabilised around the 0.8650 level since the UK Prime Minister Theresa May’s speech last week”.

“Tomorrow, the Supreme Court will announce its ruling on whether it is the government or parliament that can trigger Article 50. It is widely expected that the government will lose the appeal, meaning that parliament will have to vote in favour of triggering Article 50 before Brexit becomes a reality. If the ruling turns out as expected, it should have little market impact, as a decent amount of short GBP bets have probably been cleared following May’s speech”.

“If the Supreme Court on the other hand rules that the government can trigger article 50, it would be very negative for GBP”.

“In any case, we still expect GBP to come under pressure as the triggering of Article 50 moves closer. We target EUR/GBP at 0.88 in 3M but see risks skewed to the upside”.