EUR/GBP sees potential upside on BoE – Danske Bank

Senior Analyst at Danske Bank Mikael Milhoj sees prospects of further upside in the European cross on today’s BoE event.

Key Quotes

“We see risks skewed to upside for EUR/GBP on today’s Bank of England MPC meeting. Market is still pricing in roughly 50/50 for a May hike in the UK. We expect the BoE to take a wait-and-see approach today suggesting only a slim chance of a rate hike in H1, in our view”.

“Meanwhile, Theresa May and her cabinet will meet again today to discuss Brexit. According to the media, the cabinet is far from reaching an agreement on how the UK would like Brexit and a transition period to look like. Any indication that a transition agreement could be drawn out should be negative for GBP”.

“A break of the technical resistance level at 0.8909 in EUR/GBP could pave the way for a test of the high end of the 0.8650-0.90 range, which we still expect to hold. Strategically, we remain bullish GBP on a medium term horizon and we would consider selling EUR/GBP if the cross breaks above 0.8950”.