An EU-UK deal has been reached.
The UK's EU in/out referendum is set to be held in June (23 June).
Our main scenario is that the UK remains in the EU.
However, opinion polls indicate it is a close race and we would not rule out the possibility of the UK voting to leave the EU.
A 'Brexit' could have a large impact on both the UK and the EU but we are in uncharted territory. To a large extent, it depends on the future relationship between the EU and UK in the case of a Brexit.
Given the significant uncertainty surrounding the EU referendum, we see risks skewed on the upside for EUR/GBP going into election day. We expect volatility to remain high and believe EUR/GBP is likely to be very sensitive to newsflow, changes in polls and so on.
We forecast EUR/GBP at 0.80 in 3M, lower in 6-12M on relative rates, growth and no Brexit. In our view, EUR-based clients should maintain a high short-term FX hedge ratio on GBP risks.
To read the entire report Please click on the pdf File Below