"The pound has continued to strengthen during the Asian trading session despite further dovish comments yesterday from BoE policymakers.

The pound's upward momentum has been reinforced after EUR/GBP closed below its' 200-day moving average at around 0.8470 for the first time yesterday since late in 2015.

It could provide an important bullish technical signal for the pound in the near-term, and supports our view that the pound will outperform more bearish expectations during the first half of this year and lower EUR/GBP closer to the 0.80000-level.

Building political risks in Europe are providing support for the pound and are beginning to outweigh Brexit concerns at least in the near-term.

We have never bought into the view that the triggering of Article 50 which is still likely next month should justify further pound weakness after it has already lost around a fifth of its value against the currencies of the UK's main trading partners in recent years.

We continue to believe that the bulk of the Brexit adjustment is already behind us with a lot of bad news and uncertainty already priced into the pound at current weak levels".

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