EUR/GBP: 0.8800/0.9000 looks the top of range, but many risks – ING

EUR/GBP has once again met resistance over 0.88, despite a collection of GBP negatives building – particularly a weakened government that may not be able to deliver anything explains Chris Turner, Research Analyst at ING.

Key Quotes

“Indeed, well intentioned calls for a cross-party approach to Brexit look naïve – with both Labour and the Conservatives unlikely to reach compromise. Labour looks more focused on bringing down the Tory government – and early elections, or at the very least a new Conservative leader, look likely this summer.”

“The GBP bull case relies on a) GBP being undervalued (we agree), b) a government being able to deliver a softer Brexit (very uncertain at this stage).”

“A strong EUR in 3Q17 should see EUR/GBP test 0.88/0.90 – and an uncertain political outlook favours high GBP hedge ratios.”