EUR/GBP scope for a test of 0.8746 – Danske Bank

The European cross remains poised for a potential visit to the mid-0.8700s for the time being, according to Jens Pedersen, Senior Analyst at Danske Bank.

Key Quotes

“EUR/GBP continues to trade around the 0.88 level this morning and the market seems positioned for additional progress in the Brexit talks”.

“In our view, the past day’s rally in GBP is overdone given that a divorce agreement in itself should only have a limited impact on overall Brexit uncertainty/risk premium”.

“What matters more for GBP is the future relationship and reassurance that a cliff edge Brexit is avoided (an agreement on a transitional period will reduce the risk of cliff edge considerably)”.

“However, momentum looks strong and EUR/GBP could decline further near term we see additional progress in negotiations in the coming days. Technically, the break of 0.88 has opened up for a test of the key support level at 0.8746”.