POV: GBPDEM: A Message for EURGBP Chart:...>

STERLING: POV: GBPDEM: A Message for EURGBP Chart: http://tinyurl.com/MNI-GBPDEM

Following the release of the draft Brexit text and the resignation of Brexit

Secretary Dominic Raab, we have looked at the long-term technical position of

sterling.

- GBPDEM has a longer history than EURGBP and was actively traded rather than

the synthetic euro often used in EURGBP charts prior to 1999. 

- GBPDEM has been on a long-term downtrend since the mid-1980s (a long-term

uptrend in EURGBP). Throughout that time any sterling corrections higher have

been very weak. This points to a weak technical outlook for GBPDEM.

- The shorter-term uptrend in GBPDEM was broken immediately following the Brexit

referendum in June 2016.

- Seasonals also are not supportive for sterling. Since the introduction of the

euro in 1999, EURGBP has moved higher in the two-month period of Nov-Dec 12 out

of 19 times, and in December alone EURGBP has moved higher 13 out of 19 times.

- A no deal Brexit could see EURGBP move to multiyear highs of 0.98, last seen

in the depths of the financial crisis.