Goldman Sachs Like Short EUR/GBP

Goldman Sachs note that "though it is unlikely to be a straight line from here, we think the market is still pricing a significant degree of uncertainty into Sterling that is no longer warranted. An orderly exit should persuade longer-term investors to reduce their UK underweights that have persisted since the Referendum, as well as significantly reduce the risk that the Bank of England will introduce negative rates. While we have frequently cautioned that the more uncertain global backdrop has made it harder to express views on the Brexit process in the currency this year, we are encouraged by the Pound's increasingly idiosyncratic price action as the negotiation deadlines draw near. We recommend going short EUR/GBP targeting 0.8700 (with a stop at 0.9250). Investors with a stronger conviction that risk conditions will improve into year-end should consider expressing the view in Cable to also benefit from likely Dollar depreciation."