The third round of Brexit negotiations is set to take place in Brussels between 28 August and 4 September. The finalisation of the first phase of the negotiations may be postponed till the EU summit in December.
Due to the poor election result, PM Theresa May's position has weakened and the minority government is under pressure from both remainers and Brexiters. The divided cabinet complicates the Brexit negotiations, as it is difficult to see what the UK wants to achieve from the negotiations.
The UK government is expected to publish a series of position papers on the divorce bill and the Irish border issue over the coming months.
Due to PM May's weak position, it is worth keeping an eye on the Conservative Party conference at the beginning of October, where Conservative rebels may try to overthrow her.
We expect EUR/GBP to trade within the 0.90-0.92 trading range and specifically forecast it at 0.91 in 1M and 3M.
Over 3-12M, we expect EUR/GBP to drift back below 0.90 on the back of potential for some clarification regarding the Brexit negotiations and valuations.
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