EUR/GBP: bearish outlook on Brexit sentiment shifting - BTMU

Analysts at Bank of Tokyo Mitsubishi explained the resilience of the UK economy to the Brexit shock is increasing the risk of a short squeeze higher for the pound in the near-term.

Key Quotes:

"The latest IMM report revealed that short speculative pound positions remain close to record highs reflecting elevated Brexit related pessimism.

If the government announced a material loosening of fiscal policy as well in the Autumn Statement it would help to further ease downside risks for the UK economy and offer more support for the pound.

In contrast, the scope for the euro to strengthen is more limited as it has already largely reversed its initial modest Brexit driven decline against the US dollar."