EUR/GBP seen edging higher in the medium term – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, assessed the prospects of the Sterling for the next months.

Key Quotes

“In the short term, we expect EUR/GBP to stabilise around the 0.90 level as the cross still looks technically overbought”.

“We have lifted our 1M and 3M forecasts following the repricing of the Brexit risk premium. We now target EUR/GBP at 0.90 in 1M (0.87) and 0.91 in 3M (0.88)”.

“We still expect EUR/GBP to continue to trend higher in the coming six to nine months. This is due to the political uncertainty along with the considerable imbalances in the UK economy, where the significant current account deficit and the net foreign debt accumulated through several years of current account deficits are set to continue to weigh on the GBP”.

“We have kept our 6M and 12M forecasts unchanged at 0.92 and 0.90, respectively, but stress that risks are skewed towards the cross overshooting our forecast in the coming three to 12 months – especially if we actually get a ‘hard Brexit’.