GBP: outlook is still negative – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, sees the outlook on the Sterling as negative for the time being.

Key Quotes

“GBP once again underperformed in the G4 space yesterday and EUR/GBP broke above 0.92 reaching the highest level since the so-called ‘GBP flash crash’ on 7 October 2016 where EUR/GBP briefly spiked above 0.94”.

“We have previously called for EUR/GBP within the range of 0.90-0.92 near term, and while we still expect EUR/GBP to stabilise due to a more soft tone from Draghi on Friday, the underlying negative momentum for GBP is currently strong”.

“As such, GBP could still continue to trade with a moderate negative bias in the coming months ahead of the Tory party conference and key Brexit talks in October”.

“Hence, we see risks mainly skewed to the upside for EUR/GBP in the short and medium term, and we still recommend investors and corporates hedging GBP assets/income to maintain a high hedge ratio”.