GBP/USD is at the mercy of the EU Summit on Brexit. Where will cable go next?
Here is their view, courtesy of eFXdata:
Barclays Research discusses its expectations for the Brexit deal on the EU Summit On Thursday.
“A formal agreement already at this week’s EU summit (Thursday) would be a positive surprise, but is unlikely, given procedural considerations, in our view. In particular, a staff level agreement should have already been reached by now to allow for final document at this week’s EU summit.
Nonetheless, we expect EU leaders to demonstrate concrete progress this week and finalize the agreement next month at an extraordinary EU summit, leading to some further GBP gains versus EUR and USD and pricing out of the negative-tail in GBP option markets,†Barclays argues.
“An alternative scenario, not part of our base case, in which the UK leaves the EU in March 2019 without a Withdrawal Agreement, is one in which the BoE would have to ease policy by 50bp and GBP would depreciate by 5-10%,†Barclays adds.
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