Short EUR/GBP for target of 0.90 – Deutsche Bank

Analysts at Deutsche Bank suggest to go short on EUR/GBP pair for target of 0.90 while entry being 0.9284 and maintaining a stop loss of 0.9420.

Key Quotes

“While we remain structurally bearish on GBP, we think EUR/GBP is due some correction in the short term. The cross is technically stretched with the 14-day RSI running above 80, a level it has reached only four times since 2008. Moreover, Bank of England pricing looks very dovish again with no hikes priced until late 2019. While we don't expect a hike until there is more political clarity around Brexit, the Bank is likely to express discomfort with the TWI being back to 2016 lows.”

“EUR/GBP has already overshot short-end rates. Lastly, while the latest round of negotiations with the EU got off to a bad start yesterday, we think last week's government paper proposing an EFTA compromise signals a more pragmatic approach from the UK government, reducing the risk of a cliff edge Brexit more than the market has appreciated.”