EUR/GBP to target 0.84 in 3M – Danske Bank

Jens Nærvig Pedersen, senior analyst at Danske Bank, explains that the EUR/GBP pair has stabilised just above the 0.855 level after the break below 0.86 yesterday and the cross is now in unchartered territory, which means that there could be more in store on the downside from a technical point of view.

Key Quotes

“For Brexit, it now comes down to three key votes in mid-March (vote on full deal on Tuesday 12 March, vote on support for no deal on Wednesday 13 March and vote for extension of Article 50 on Thursday 14 March) and we expect the cross to stabilise near term as we are unlikely to get much news over the next two weeks.”

“We still hold the view that either we will see a Brexit deal passing eventually or a second referendum and both these scenarios are likely to bring more GBP strength. We target 0.84 in 3M. The key risk is that Brexit clarifications are prolonged and GBP appreciation materialises more gradually than our forecast implies.”