EUR/GBP stays bid – Danske Bank

Head of FI Research at Danske Bank Arne Rasmussen noted the better tone in the European cross, although he suggests fading rallies for a dip towards the 0.8700 area.

Key Quotes

“EUR/GBP remains bid after it broke above 0.89 yesterday as the media reported that Theresa May is facing growing demands to step down as Prime Minister”.

“It remains uncertain whether the anti-May wing within the Conservative Party has enough support to force her out of office against her will. If May steps down, it would be negative for GBP initially”.

“However, while upside risks in EUR/GBP have increased, we still value in selling the cross at current levels from a risk/reward perspective, to position for a move towards 0.87 going in to the Bank of England meeting on 2 November”.