EUR/GBP looks increasingly oversold – Danske Bank

Senior Analyst, Morten Helt at Danske Bank, notes that EUR/GBP continued lower yesterday and has dipped below 0.87 this morning as the move lower in EUR/GBP yesterday was driven by a strong UK jobs report, a sell-off in USD and brewin g Brexit optimism.

Key Quotes

“EUR/GBP looks increasingly oversold according to short-term measures suggesting a high correction risk. However, momentum is strong and a dovish stance from the ECB today could weigh further on EUR/GBP.”

“Key support levels in EUR/GBP are seen around 0.8690 and 0.8652 and a break below 0.8652 would send the cross into unchartered technical territory. We expect EUR/GBP to break lower in 6-12M on Brexit clarification, and we recommend clients with GBP income/assets to hedge GBP exposure via options. We are short EUR/GBP as one of FX Top Trades for 2018.”