Credit Agricole CIB Research discusses GBP outlook into the 15-16 October EU summit.
"Our central case remains for a ‘bare-bones’ Free Trade Agreement (FTA) between the UK and the EU to be agreed on before the effective deadline in late November (eg, to allow enough time for the UK and the EU parliaments to ratify the deal before the end of 2020). Indeed, we continue to think that a trade deal is in the best interest of both the EU and the UK," CACIB notes.
"Looking ahead, the 15-16 October EU summit may not produce the breakthrough in talks that the markets are hoping for. In turn, such an outcome could put the GBP under some renewed pressure and keep short-dated GBP vol supported. We believe that a no-trade-deal Brexit will be avoided, however. The GBP should remain a buy on dips, targeting a move towards 1.3200 in GBP/USD and 0.8900 in EUR/GBP," CACIB adds.