EUR/GBP risks tilted to the upside medium term – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, expects the European cross to pick up some pace in the near to medium term.

Key Quotes

“GBP weakened versus USD yesterday while EUR/GBP dropped to 0.8760 as termination of EUR/USD longs weighed on EUR. Comments from EU President Donald Tusk saying that while he feels cautiously optimistic there is no sufficient progress yet, probably also weighed on GBP as the prospects of progress in Brexit negotiations looks weak”.

“The next pivotal event for GBP will be the joint press conference with Brexit Secretary David Davis and EU’s Chief negotiator Michael Barnier on Thurdsay when the ongoing fourth round of Brexit negotiations ends”.

“We still see EUR/GBP trading within the 0.8750-0.89 range near term with risks skewed slightly to the upside as GBP is likely to trade on a weak note ahead of the Conservative Party congress starting on 1 October. Tactically, we would consider buying EUR/GBP on dips to 0.8750 for a possible short-term rebound towards 0.89”.