We anticipate the sterling will see further selling heading into late October. Over the weekend, Boris Johnson attacked Prime Minister Theresa May's Chequers plan calling it "deranged' and "entirely preposterous”. The vicious attack indicated how divisive the subject remains. To secure support at this week's Conservative Party conference, May is likely to take a hawkish stance in her keynote speech on Wednesday in Birmingham. Should May take a hard line, this will generate additional friction. We remain constructive on EUR/GBP watching for a reversal of weakness to regain the 0.9000 level.
By Peter Rosenstreich