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Aug 20, 2014
EUR/GBP attention to the downside – Danske Bank
FXStreet (Edinburgh) - The cross could well resume its previous decline in light of today’s BoE minutes, suggested Flemming Nielsen, Senior Analyst at Danske Bank.
Key Quotes
“EUR/GBP currently trades very close to our short-term financial model’s fair value estimate of 0.80”.
“According to our short-term financial model, a 10bp increase in relative rates (2-year swap spread) between the UK and the EU should - everything else being equal - lower the fair value estimate by around one figure to 0.79 and thus this is probably today’s potential in the event of hawkish minutes”.
Key Quotes
“EUR/GBP currently trades very close to our short-term financial model’s fair value estimate of 0.80”.
“According to our short-term financial model, a 10bp increase in relative rates (2-year swap spread) between the UK and the EU should - everything else being equal - lower the fair value estimate by around one figure to 0.79 and thus this is probably today’s potential in the event of hawkish minutes”.