A Lasting GBP Rebound Still Far Away
Danske Markets | Apr 19, 2017 07:22AM ET
EUR/GBP sold off after the UK Prime Minister called for a snap election to be held in June as markets eye a wider sample space for Brexit outcomes. If Theresa May resumes power, the cross is likely to see a level shift higher post the election and we look for EUR/GBP to trade in the 0.84-0.88 interval over the next year.
We recommend clients with sterling income/assets to lock in current levels using forwards, as we expect a resumption of the May leadership to induce a move higher in EUR/GBP again. Clients with GBP expenses should consider hedges with the optionality of benefiting from another GBP setback after the election.
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