Goldman Sachs: Stepping Back To Reassess

Goldman Sachs are closing their trade recommendation to "go short EUR/GBP at a small profit, but well short of our initial 0.87 target, which we had thought could be achieved once the UK and EU secured a post-Brexit trade agreement. While the initial market reactions to Brexit developments were in line with our expectations, it appears that further appreciation pressure was stymied at least in part by resurgent Covid risks. Our economists remain confident that the UK will ultimately be well-placed to benefit from prolific vaccine distribution, a rebound in the outsized service sector and strong policy support, but it is also true that the Brexit deal is relatively narrow in scope and activity will continue to face a number of headwinds over the coming months. As a result, and with the main catalyst now behind us, we are taking a step back to reassess our Sterling views for the post-Brexit world (while leaving our GBP forecasts unchanged)."