EUR/GBP still a ‘buy on dips’ – Danske Bank

Analyst at Danske Bank Thomas Rosenlund suggested that occasional dips in the European cross should be seen as buying opportunities.

Key Quotes

“After yesterday’s price action, the EUR/GBP has fallen back below our 1-3M target of 0.87. As such, we still see risks skewed on the upside for EUR/GBP as we expect GBP to underperform vis-à-vis USD and EUR in the weeks ahead and after the triggering of Article 50”.

“However, Brexit risk premium priced on GBP has increased over the past two to three weeks and, given that investors are very short GBP, according to IMM, further GBP short covering could pave the way for a short-term correction lower in EUR/GBP. Tactically, we prefer to buy EUR/GBP on dips, for move up to 0.88”.