UK: Economy guided by Brexit developments – Rabobank


Jane Foley, senior FX strategist at Rabobank, suggests that it is their central view that Brexit will be delayed beyond October 31, but since a delay is not a solution, they see risk that EUR/GBP will be trading close to current levels on a 3 month view.

Key Quotes

“The Brexit related news reports yesterday reached fresh levels of animosity. One report suggested that the UK government would be prepared to withhold cooperation in security and defence for countries that pushed the UK into a Brexit extension. Given the likelihood of a general election in the UK in the coming months, investors are attempting to read between the lines of many of the recent headlines to try and determine how much is electioneering on the part of the UK government.”

“The FTSE 100 has recovered some of last week’s losses but in the current environment it would appear that GBP weakness is not sufficient to protect the UK’s largest companies from the impact of slowing global demand. This implies that while Brexit related news remains the primary driver for GBP, investors are likely to be drawn by tomorrow’s releases of UK August production data and monthly GDP.”

“Even if tomorrow’s data releases do not enhance the clouds hanging over the UK economy, slowing global growth and domestic political uncertainty will ensure that GBP remains vulnerable. While the Brexit delay scenario and related 3 month forecast of EUR/GBP0.90 is our central view, on a no deal Brexit we see scope for EUR/GBP to surge towards parity and on a Brexit deal we would expect EUR/GBP to drop back to the 0.85 area with a downside bias.”

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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD pressured around 1.13 after jump in US jobs

EUR/USD is trading around 1.13, down after US Non-Farm Payrolls shocked with a leap of 2.5 million jobs in May, contrary to all projections. The greenback is gaining while stocks are falling, a correlation breakdown. ECB stimulus previously supported the euro.

EUR/USD News

GBP/USD retreats from highs

GBP/USD is trading below 1.27, off the highs. The pound is struggling after Chief EU Negotiator Barnier reported little progress in Brexit talks. Robust US jobs support the dollar.

GBP/USD News

Gold sees weekly closing below $1700 - a caution for bulls

The steady decline in Gold prices (futures on Comex) accelerated on Friday, as the rates closed the week below the 1700 mark for the first time in three weeks at 1688.35. A weekly closing below the key 1700 level is unlikely to bode well for the bulls.

Gold News

Institutional demand exceeds Bitcoins supply

Greyscale floods the market with fresh money to satisfy the demand of its clients. Investors, willing to pay a 29% surcharge for exposure to Bitcoin without suffering the legal and operational inconveniences. Market remains at risk on the verge of new bullish territory.

Read more

WTI rallies above $39 as focus shifts to OPEC+ meeting

Crude oil prices built on Thursday's modest gains and rose sharply on Friday boosted by the upbeat market mood optimism surrounding Saturday's OPEC+ meeting. 

Oil News

Forex MAJORS

Cryptocurrencies

Signatures