EUR/GBP risks point to the upside – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, gives his views on GBP performance in light of the current Brexit negotiations.

Key Quotes

“A rather volatile session for GBP yesterday. EUR/GBP initially dropped from 0.89 to 0.886 on higher-than-expected UK inflation data and then bounced back a couple of hours later following a Times report that Theresa May was said to have rejected Michel Barnier’s proposal for an ‘improved Irish border’. The informal EU Summit continues today and we expect EUR/GBP to remain volatile and sensitive to Brexit news”.

“We generally see risks skewed to the upside for EUR/GBP in coming weeks ahead of the annual conservative party congress, which starts on 30 September. Hence, corporate clients should take advantage of the recent decline in EUR/GBP and high implied volatility when hedging GBP income”.