EUR/GBP stays volatile for the time being – Danske Bank

Mikael Milhoj, Senior Analyst at Danske Bank, expects the European cross to remain volatile for the time being.

Key Quotes

“We expect EUR/GBP to remain relatively volatile within the 0.8850-0.90 range as we have several important events for GBP in the calendar this week: First of all, we have the two key data releases ahead of the BoE Meeting on 2 November; September CPI figures (due tomorrow) and the labour market report (due on 18 October)”.

“Secondly, BoE’s Mark Carney, David Ramsden and Silvana Tenreyro are testifying before the UK’s Treasury Committee on Tuesday, and finally, Brexit negotiations will be discussed at the EU Summit”.

“We think the EU leaders are unlikely to conclude there has been ‘sufficient progress’ in phase 1 of the Brexit negotiations (divorce bill, citizens’ rights and Irish border) to move to phase 2 (future relationship)”.

“We still expect the BoE to hike in November, and from a risk/reward perspective, we see value in selling EUR/GBP if the cross bounces above 0.8970 for a move lower going into the BoE meeting on 2 November”.