DAILY ANALYSIS

EURGBP may suffer retaliatory decline

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EURGBP may suffer retaliatory decline
Independent analyst: Zhen Quanxi


The market has no doubts about the decision of the European Central Bank to cut interest rates and increase quantitative easing to save the economy, and it is also mentally prepared for the fall of the euro.

On the other hand, the British Prime Minister Johnson is gradually losing control of the situation. The rebel Conservative parties and opposition parties are more likely to pass legislation to remove the “no-deal Brexit” from the negotiating table, which is what the market wants.

On the 6th, the British Parliament passed a bill aimed at preventing “no-deal Brexit”, which will become law after being submitted to Queen Elizabeth II for signature. The passage of this bill means that at the legal level, the British Prime Minister Johnson will unable to implement “no-deal Brexit” unless the United Kingdom reaches a new "Brexit" agreement with the EU before the end of the European Council on October 19, otherwise Johnson will have to seek the EU's agreement to postpone "Brexit." British Labor Party Lord McDonald claims that we do not believe that British Prime Minister Johnson, and we will do everything possible to prevent “no-deal Brexit”.

Believe in the EU's past commitments, the EU will allow a delay in Brexit. If the interim government is established, it should be led by the British Labor Party leader Corbin, and does not believe that another Scottish independence referendum is needed. On the same day, the British Chancellor of the Exchequer Javid stood up and responded that it is a mistake to think that the government has not done enough to reach a Brexit agreement.

We are doing our best to reach a Brexit agreement and will not support any form of Northern Ireland guarantee scheme. The government will of course abide by the law. British Prime Minister Johnson will attend the European Council on October 17 and try to reach a Brexit agreement, but will not ask for a delay in Brexit.

Through the above information, it is not difficult to find that Johnson used the approach of rogue-style means to force hard-free Brexit since he took office. This is the root cause of the sharp rebound of the pound in recent days. The trend of the EURGBP between the euro and the pound has shown a clear downward trend. If the Eurozone's interest rate cut turns into a fact on 12 September, the EURGBP is expected to induce a retaliatory decline. It is worthwhile to seek a rebound short before the interest rate decision.

Disclaimer:
All the information mentioned above only represents the view of corresponding PT. Mentari Mulia Berjangka. The information, opinions and analysis contained herein are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. PT. Mentari Mulia Berjangka is not responsible for the content of any analysis, advice, comment, suggestion, research report or market data in this article and link to third-party resources.