EUR/GBP to stay in the 0.88-0.9060 range – Danske Bank

Mikael Olai Milhøj, senior analyst at Danske Bank, suggests that EUR/GBP price actions resemble a ‘buy the rumour sell the fact’ as it declined despite the vote against the Prime Minister’s Brexit deal being much larger than expected and there was GBP short covering in the aftermath of the vote.

Key Quotes

“It was widely expected that the PM would lose the vote and in that sense nothing has changed and all options for Brexit are still on the table. However, we are now in uncharted territory in terms of what will happen next and the next days of debate in parliament and not least the ‘no confidence’ vote tomorrow will be directional for GBP.”

“We expect EUR/GBP to stay in the 0.88-0.9060 range until further Brexit clarification. As such, an extension of Article 50 would be positive for GBP as it reduces the risk of a ‘no deal’ Brexit, while pressure on GBP might increase due to rising uncertainty as 29 March moves closer.”