EUR/GBP could lunge towards parity if UK is on course to crash out of EU - Rabobank

Eren Sengezer FXStreet

"Several UK MPs this week have stated that there is an insufficient majority in parliament to pass PM’s May’s Brexit deal. This implies that there is a real risk of a hard Brexit in March 2019," note Rabobank analysts.

Key quotes

"Understandably, GBP has come under significant pressure, though the defiance of the PM and her reluctance to entertain questions about a leadership challenge has helped settle some nerves."

"The coming days will be difficult for PM May. She has an uphill challenge in holding down her job and bringing together her government and a potentially an even bigger task in trying to persuade parliament to back the deal she has struck with the EU."

"Any sign that the PM is succeeding is likely to be met by a relief rally in the pound. That said, investors are set to remain cautious. If it appears that the UK is on course to crash out of the EU next year, EUR/GBP could lunge towards parity. "

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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