Sell EUR/GBP – EU polls outplay Brexit in near term - Westpac

Analysts at Westpac offered a sell EUR/GBP idea.

Key Quotes:

"Entry: Short 100% at 0.8485; Stop: 0.8525 Target: 0.8325.

Rationale:

• A dearth of fresh top tier data in EU and UK over the coming week is likely to see markets turn their focus towards political pressures
• Carney and BoE MPC members weathered the storm of Parliamentary scrutiny and gave a balanced outlook for UK prospects whilst debating of the Article 50 Bill in the Upper House (Lords) seems unlikely to create any uncomfortable obstacles for the May Government
• Political uncertainties are weighing on Eurozone yield spreads, notably at the shorter end. The Dutch election is less than a month away and though a coalition is the most likely outcome, the far right continue to poll uncomfortably (for markets) strongly
• The first round of French Presidential elections may be 2 months away, but polls continue to suggest that Le Pen will go the second round and angst is building over who will face her. If a joint-left wing candidate were to poll higher, the optics of Left vs Le Pen is likely to further weigh on EUR
• Although technical inputs are relatively neutral, they do provide a notably neat profile for playing a break lower in EUR/GBP."