- Sell the Pound and Buy the Euro this summer say Credit Suisse.

- Government "soft Brexit" pivot risks backlash from Brexiteer MPs.

- Good to sell Pound-to-Euro rallies around the 1.15 level, buy EURGBP.

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The Pound will struggle to sustain any meaningful advance against the Euro this summer as the Brexit negotiations approach their final stages, according to strategists at Credit Suisse, who have advocated that clients of the bank "buy dips" in the Euro-to-Pound exchange rate.

This is the same thing as saying "sell the rallies" in the Pound-to-Euro rate and Credit Suisse strategists are doing exactly that, despite an apparent pivot by Prime Minister Theresa May and her cabinet toward a so called "soft Brexit", which many have argued would be good for the Pound.

The call comes right after Prime Minister Theresa May narrowly avoided a damaging defeat by some of her own lawmakers in parliament. The House of Commons rejected the "meaningful vote" amendment to the European Union Withdrawal Bill by a majority of 26, with 324 votes against the amendment, and 298 in favour of it.

Similarly, the House of Commons also rejected an attempt by some government and opposition MPs to remove the "exit date" from the withdrawal bill.

"Tuesday saw Theresa May avoid a defeat on the "meaningful vote" amendment, but only because she made big concessions to rebellious, pro-EU Conservative MPs that will likely increase the odds of Parliament taking control of the Brexit process if the government fails to reach a deal by November," says Shahab Jalinoos, global head of FX strategy at Credit Suisse.

Former Attorney General Dominic Grieve, who tabled the so called meaningful vote amendment, told Sky News the Prime Minister has offered "discussions" over the amendment and possible changes to the EU Withdrawal Bill at a later date.

"As long as the government can now keep hard Brexiters at bay – we assume they will plan a counterattack – this outcome paves the way for much reduced odds of a "no deal" hard Brexit," says Jalinoos.

Grieve's amendment seeks to give parliament the power to send PM May back to the negotiating table in Brussels if it is not happy with the final deal that has been agreed. It also seeks to hand the negotiations over to parliament after February 15, 2019 if a deal has not been agreed by that time.

There is a substantial majority of MPs in parliament who were in favour of remaining in the EU ahead of the referendum and a hefty majority that are attempting to prevent the government from withdrawing the UK from the EU's customs union, single market and legislative oversight.

Jalinoos credits PM May's concession to Grieve with fending off another bout of weakness in Sterling exchange rates, which could have pushed the Pound-to-Euro rate back below the key 1.13 level.

He also told clients Wednesday the exchange rate should now remain in the same 1.13 - 1.15 range that has prevailed over the last three months. However, risks are overwhelmingly to the downside given the prospect of "hard Brexiters" making an attempt to "derail the May government's slow but steady grind to a soft Brexit". This could easily come to a head if a key cabinet minister such as David Davies or Boris Johnson were to resign in protest at the government's plans.

"In this context, we continue to see EURGBP as a "buy dips" proposition over the summer on corrections towards 0.8700, while GBPUSD still faces tough resistance above 1.3500," the strategist concludes.

The Pound-to-Euro rate was quoted 0.04% higher at 1.1340 Thursday while the Pound-to-Dollar rate was 0.17% higher aty 1.3403.

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