EUR/GBP risks still tilted to the upside – Danske Bank

Sverre Holbek, Senior Analyst at Danske Bank, believes the European cross could still edge higher, targeting the 0.9360/65 band.

Key Quotes

“EUR/GBP also bounced yesterday and with the cable being relatively stable, the move higher in seems mainly driven by the EUR rally this time round and not by Brexit uncertainty”.

“Technically, EUR/GBP is in unchartered territory with 0.9365 (high from 7 October 2016) as the next resistance level. A break above 1.2970 in GBP/USD could open up for a test of 1.30 and thus induce some near-term GBP recovery”.

“Domestically, the downgrade process of lower GDP expectations in the UK and BoE rate hike expectations looks mature, and EUR/GBP is likely to remain in the hands of investor appetite for EUR”.

“We still see risks skewed to the upside for EUR/GBP near t erm given the high political uncertainty in the UK (both internally and in terms of Brexit)”.