EUR/GBP still points to further upside – Danske Bank

The European cross appears poised for a correction lower, as noted by Arne Rasmussen, Chief Analyst at Danske Bank.

Key Quotes

“EUR/GBP moved back up to 0.88 level yesterday: price action indicates that the move was driven primarily by month-end flows while strong EU CPI data also underpinned the cross”.

“We still see EUR/GBP risks skewed to the upside short term and we recommend EUR- and DKKbased clients to hedge GBP asset/income via risk reversals with a premium payment”.

“Beyond the 6M horizon, clients could consider to hedge via participating forwards as an alternative to risk reversals to benefit from a Brexit-clarification-driven GBP rebound”.