EUR/GBP: PM in second defeat on article 50 bill, pair heading towards 0.87

On Tuesday, the UK government suffered its second defeat in the House of Lords in less than a week, as the Lords voted for an amendment to the EU bill demanding a "meaningful vote" on the final Brexit deal (366 voted in favour, 268 voted against). On Wednesday, the Lords amended the EU bill by demanding protection of EU citizens currently living in the UK, see also Brexit Monitor #23: PM May still set to trigger Article 50 before "end of March" despite defeat in House of Lords, 2 March. Note that the Lords voted against a 2nd referendum on the final Brexit deal (a proposal by LibDems).

....EUR/GBP has depreciated recently and is currently trading at 0.866. We expect EUR/GBP to move higher in the coming months ahead of and after the triggering of Article 50 and we target the EUR/GBP at 0.87 within 3 months.

That being said, the EUR/GBP is not only affected by political uncertainty in the UK but also in Europe, not least due to the French presidential election, which may put downward pressure on EUR/GBP if Marine Le Pen gains momentum in polls and markets begin to price in a political risk premium in the euro.