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EUR/GBP: All about politics - Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 10, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Research Team at Rabobank, notes that the GBP has fallen hard on fears of a possible exit of the UK from the EU, with the decision by London Mayor and popular politician Boris Johnson to throw his weight behind the “Leave”-campaign providing the trigger for the selloff.

    Key Quotes

    “Widespread concern that the June 23 referendum could be a close one has been compounded by reports that around 20% of voters are undecided. The implication of this is that over the next four months there is the potential for the polls to swing either way.

    On the basis that political uncertainty is currency negative we revised lower our 1 and 3 month forecasts for sterling. That said, we see GBP/USD as the better medium to express a negative sterling view given the potentially negative implications for the EUR from both a Brexit and the immigration crisis. On the assumption that the “Remain”- campaign will be ultimately successful, our forecasts point to a stronger tone for sterling in the second half of 2016.”
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