Aila Mihr, Analyst at Danske Bank, sees the European cross picking up pace later in the year on Brexit conerns.
“EUR/GBP dropped below 0.88 on Friday after the cross firstly broke below the 200-day moving average at 0.8841 and secondly declined again on comments in the media that the EU is ready to offer the UK a `super-charged’ free-trade deal”.
“Brexit optimism has improved and EUR/GBP has dropped nearly 1.5% since the Conservative Party Congress ended on 3 October, as Theresa May managed to leave the congress without any new troubles. Both momentum and the technical outlook – especially after the break below the 200-day moving average – point to further downside in the short term.
“However, we see only little chance that an agreement will be reached before November, suggesting that the latest Brexit optimism quickly could be reversed again”.