GBP/USD stays negative on Brexit jitters – Danske Bank

Jens Sorensen, Chief Analyst at Danske Bank, noted the negative sentiment around the Sterling remains far from abated.

Key Quotes

“GBP sold off significantly yesterday with EUR/GBP breaking above 0.90 while GBP/USD broke below 1.29 for the first time since 1 September 2017. There has not been any news or data behind the recent day’s sharp sell-off in GBP, which seems to be momentum and technically driven and a clear indication that investor appetite for GBP exposure has been eroded ahead of the very important upcoming Brexit negotiations in Q3 and Q4”.

“As such, the sell-off yesterday seems overdone, and for the longer-term investors, we still think selling EUR/GBP at current levels is attractive from a medium-term risk/reward perspective. However, given the strong negative momentum in GBP, and that both EUR/GBP and GBP/USD has now technically entered unchartered territory, we recommend maintaining a cautious tactical stance and wait for confirmation that the trend higher in EUR/GBP has ended, before adding short positions”.