EUR/GBP heading back towards 0.846 - Natixis

Nordine Naam, Research Analyst at Natixis, notes that the s

Key Quotes

“The British currency continues to be bolstered by the absence of news concerning Brexit and by some good macroeconomic data, notably manufacturing output and property prices. This week, watch out for retail sales and unemployment figures, which are expected to be good. In the short term, sterling still has some upside potential, in particular if speculative accounts square their short positions in the currency and if there are no news concerning Brexit.”

“In the very near term, the EUR/GBP can be expected to remain on a downtrend until year-end, with the pair likely to head towards 0.846. it is not until 5 to 8 December that sterling will come under renewed pressure, this being when the Supreme Court will be in session to decide whether to uphold or reject the ruling by the London High Court. If the High Court ruling is upheld, sterling will continue to appreciate even though, in the end, Parliament is likely to vote for Brexit. It is only in Q1 2017, when the market will have more of an inkling about the type of Brexit, that sterling should resume its descent, as a result of which the EUR/GBP will recover towards 0.90. If the Supreme Court dot not confirm the High Court ruling, this will slow sterling’s current rebound.”