TD Research flags a scope for a tactical recovery in EUR/GBP and likes to express such a view via long exposure around 0.8550 targeting a move towards 0.89.
“We continue to downplay the prospects of a no-deal Brexit, which again reduces the scope for a major tail event. And yet, for GBP, what matters is that much of the low-hanging fruit has been picked, suggesting increased uncertainty over Brexit could start to work against the currency. For starters, as we showed last week, positioning is neutral but at the same time, GBP runs rich to flagging growth momentum,” TD notes.
“We recently laid out a tactical case to see EURGBP higher and still remain comfortable with that idea for anyone looking to take risks related to Brexit. In short: the 0.8550 level remains entry points for a short-term rebound to 0.89, reflecting the scope for a squeeze on the GBP leg of the cross,” TD adds.