EUR/GBP Downside Playing Out on Brexit Remain Camp
EUR/GBP has seen a recent bearish trend take fold as
the clock is ticking at the start of a new month and we head ever closer
to the EU referendum and the possibility of a Brexit is actually
looking a little lower, fuelling a bid in the pound while the weakening
in U.S. dollar also underpins a recovery in Sterling.
Related read: The investor is an endangered species: Exit EU edition
"In recent weeks UK rates have risen due to significant re-pricing lower of Brexit premia—spurred on by a sharp move higher in betting odds of Remain, which got as high at 75% intraday," explained analysts at Brown Brothers Harriman, adding, "We see risks building for a correction on UK rates, as the market prices higher Brexit risks."
EUR/GBP outlook remains negative in the bearish price action on the charts. Near-term rallies could find resistance at circa 0.7920/50 and at late March highs where shorts could be added on rallies for a fade into the continuation of the downside targeting 9th of March lows at 0.7651. "We view the currency pair as having topped at .8116 and it eroding the 0.7755 January high. We look for further slippage to the 0.7654 area. It is where the March low can be seen," explained Karen Jones, chief analyst at Commerzbank.