Euro Note

Bookmaker Betfair has so far refused to revise its odds on EUR/GBP parity in 2019 – which remains priced at 3/1 – despite a number of new warnings emerging this morning from the desks of FX market analysts.

Walt Zimmerman, of ICAP New York, is the latest analyst to sound the alarm on the Pound’s weak technical signals against the Euro, stating that the growing likelihood of a No Deal Brexit suggests an impending “total mess”.

Zimmerman’s comments come just as GBP/EUR forward markets reached historic new highs this morning for six month forward contracts – indicating strong demand from the market to hedge against the implementation of No Deal by the current expected deadline of October 31st.

Value Bet Territory Looming

Betfair’s current 3/1 price on EUR/GBP parity is identical to the price offered by Irish bookmaker Paddy Power for the same market back in January.

One factor likely explaining the rock-solid stability of bookmaker prices over the last six months is that it is a binary market – where prices are just as likely to factor in the popularity of each side of the bet as they are the assessed probability of the outcome itself.

If that’s the case, then the current price of 3/1 likely qualifies as a value bet – particularly in light of the recent Liberal Democrat by-election victory in Brecon and Radnorshire.

Whilst the result was interpreted in some quarters as a boost to the anti-No Deal camp, it is also seen by a number of analysts as potentially precipitating a UK General Election – something that is likely to add to the wider uncertainty arising from Brexit and thus place further pressure on the Pound.