EUR/GBP could test 0.8746 – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, believes the European cross could slip back towards the vicinity of 0.8740 amidst rising GBP optimism.

Key Quotes

“EUR/GBP continues to trade around 0.88 ahead of Theresa May’s lunch meeting with the EU’s Juncker today and the EU’s deadline for the UK to make additional efforts to resolve differences in Brexit talks”.

“In our view, the market is already positioned for additional progress in Brexit talks, and while a test of the key support level in EUR/GBP at 0.8746 is likely if we see additional progress in the negotiations today, the case for a significant rally in GBP is limited in the near term”.

“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 a cliff edge considerably)”.