Sell EUR/GBP at 0.9085 – Westpac analysts

Analysts at Westpac are recommending to sell EUR/GBP at 0.9085 levels for the target price of 0.8845, while maintaining a stop loss of 0.9125.

• A no-deal Brexit is taxing minds once again sending EUR/GBP to six-month highs through 0.90. However the pair is testing a key three-year resistance line and momentum indicators look very mature.

• Calls for the next UK leader to purge cabinet of “remainers” and pledges by both candidates to scrap the Northern Ireland backstop (even as the EU repeatedly rules out reopening May’s withdrawal agreement) have raised no-deal Brexit risks. However, Brexit pessimism may be overdone. We expect the next leader to have a more inclusive proBrussels cabinet, reducing fears of a no-deal Brexit.

• The ECB is likely to extend forward guidance and pre-commit to further easing measures at their next meeting (July 25); their list of easing options including further cuts to negative deposit rates and reintroduction of asset purchases. Calls for buying corporate bonds as well unsecured bank debt, in addition to sovereign debt, have been growing louder in recent days.”