Markets seems less concerned with EUR/GBP and GBP/USD as 1-month volatility remains low. The European Central Bank is cautious, expected to launch new liquidity facility. While it is not directly focused on Brexit risk, it does help backstop overall European risk. We should see lower Eurobonds, especially in Italy, and the EUR/USD is poised for bullish extension. ECB’s admission of softer economic growth failed to damage the single currency. With negatives already priced into the Euro, expected improvement in economies and ECB support, a EUR/USD upside feels likely.
By Peter Rosenstreich
