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May 29 - 01:24 AM

GBP: Risk-Reward Attractive For Long EUR/GBP Targeting 0.92 N-Term - Danske

By eFXdata  —  May 28 - 10:45 AM

Danske Research likes long EUR/GBP in the near-term and prefers to express that via an options structure.

"Near term, we expect a repricing of the Brexit risk premium ahead of the 1 July deadline to send EUR/GBP higher again. We believe this will mirror similar events in late 2018 and summer 2019, when no deal Brexit fears were increasing. The fourth negotiation round is set to begin on 1 June. We do not expect any major breakthrough, as the two sides remain too far from each other. We think the cross could move as high as 0.92 near term," Danske notes. 

"Still, looking further down the road, we expect the parties to reach a deal eventually as we get closer to the deadline, which would send EUR/GBP down again. We would prefer to express our tactical bearish GBP view via options, which we believe would allow for attractive risk-reward," 

Source:
Danske Research/Market Commentary

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