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Apr 02 - 05:00 PM
EUR/GBP: A Brexit-Deal Roughly Priced In By Now; Risk-Reward & Levels To Watch - Nordea
First appeared on eFXplus on Apr 02 - 02:45 PM

Nordea Research discusses EUR/GBP outlook and thinks that risk-reward favors upside (bearish GBP) as a Brexit deal is roughly in the price for now. 

'The GBP is though already close to fair value in case of a deal. I.e. a long postponement of the Brexit deadline is not necessarily a GBP positive scenario, why we believe that the GBP could weaken over the following 3-6 months in case of such a prolongation," Nordea notes. 

"A no deal will put +0.95 range in play in EUR/GBP, in case of any deal the GBP will only be modestly stronger. A Norway-plus model or a permanent customs union would take EUR/GBP fair value to the 0.81-0.83 range, while May's deal will take EUR/GBP fair value to around 0.83-0.84 (almost at current spot-levels).

From a risk/reward perspective this leaves us with a negative GBP view, as we consider a +9 months prolongation the most likely scenario by now," Nordea argues. 

Source:
Nordea Research/Market Commentary

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