EUR/GBP extra gains seem likely – Danske Bank

Analyst at Danske Bank Thomas Rosenlund noted the Sterling remains under pressure.

Key Quotes

“GBP fell on Friday amid an article in The Times, where unidentified government sources suggested that the UK government is preparing for Scotland to potentially call for an independence referendum in March. A new Scottish referendum is likely, in our view, and if announced it would increase upside potential in EUR/GBP. However, we do not think the government will accept a referendum until after the UK has left the EU”.

“Today, the House of Lords begin the so-called committee stage, where the Lords will discuss and vote on amendments to the EU exit legislation. It remains our base case that the Lords will not delay the bill and the UK remains on track to trigger Article 50 by the end of March, perhaps already at the EU summit in Malta on 9-10 March”.

“However, given that the government does not have a majority in the Upper House, there is a risk that the Lords do not agree to the amendments. This could potentially lead to some short-term GBP support. We see EUR/GBP in the range of 0.8420-0.8650 in the coming with risks skewed to the upside”.