EUR/GBP: Sterling poised to benefit from Brexit resolution but upside limited by current account deficit - CIBC

Analysts at CIBC, expect the Pound to be trading higher against the Euro by the end of 2020, but they warn that a potential positive impact from a Brexit deal could be limited by the current account deficit. 

Key Quotes: 

“The outlook for growth in the UK has dimmed along with rising odds of a no-deal Brexit since Boris Johnson became Prime Minister, and Sterling has depreciated against its major European counterpart as a result. Our target for EURGBP still has sterling gaining ground against the euro by the end of 2020, given that our base case is that the UK avoids a hard Brexit.”

“The upside for GBP is limited by the UK’s deepening current account deficit which is approaching a record level. Indeed, our 0.86 target for EURGBP by the end of 2020 is well above the average level seen since 2000.”