EUR/GBP: Brexit starting positions?

Jane Foley, Senior FX Strategist at Rabobank, suggests that relative to the volatility experienced since last summer’s Brexit referendum, EUR/GBP has been remarkably stable thus far in February, moving mostly between a 0.8456 to 0.8645 range.

Key Quotes

“In the coming months both the EUR and the GBP are at risk of feeling the brunt of a step up in political risk ahead of the French Presidential election and the official start of Brexit. On the assumption that Le Pen does not win the second round of France’s election, we expect EUR/GBP to be trading closer to the 0.87 area on a 3 mth view with the pound weighed down by Brexit related concerns.”

“This week will see the UK government’s EU withdrawal bill debated in the House of Lords. Given the strength of support for it in the House of Commons, the unelected Upper House is not expected to oppose the bill. However, it is possible that amendments to its current form will be called for. This means that the bill could find itself back in the House of Commons for reconsideration in the coming weeks. If the bill is not amended it reportedly could be approved by the Lords as soon as March 7 and pass into law soon afterwards. This would comfortably comply with PM May’s plan of triggering Article 50 of the Lisbon Treaty at the end of next month.”

“While the colourful array of Lords that are likely to speak on Brexit this week is likely to capture the headlines, plenty of work on Brexit is being carried out behind the scenes both in the UK and in the EU. The European parliament is expect to state its initial negotiation position in the weeks after the UK PM triggers Article 50. Various committees within the European Parliament have reportedly been asked for input to aid the EU’s chief Brexit negotiator Barnier.”

“We see risk that the clarification from the EU this spring on its negotiating lines will highlight the complexity of the issues facing by the UK over the next few years and we anticipate that the start of the Brexit procedure is likely to bring downside pressure to the pound.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.