EUR/GBP: to remain between 0.84-0.85 range ahead of UK election - Danske Bank

Analysts from Danske Bank, expect the EUR/GBP pair to remain within the 0.84—0.85 range ahead of the general election in the United Kingdom on June 8. 

Key Quotes: 

“Despite some hawkish comments on the BoE view on rate hike prospects relative to the market’s pricing, EUR/GBP traded higher following the BoE announcement. 

“As such, there are probably three reasons the EUR/GBP has bounced today. 1. We think many investors expected a tighter voting split, with one or more members joining Forbes’ vote in favour of a rate increase. 2. The BoE revised its CPI inflation projection lower, which does not support the case for a rate hike any time soon. 3. The BoE’s fairly optimistic outlook for growth is conditioned on the assumption of a smooth Brexit, which remains highly uncertain.”

“We still expect EUR/GBP to remain trapped in the 0.84-0.85 range ahead of the general election on 8 June”

“We target 0.84 in 1M and would still look to sell EUR/GBP (preferably via options) if spot goes up to 0.8550. Longer term, the outlook for EUR/GBP depends largely on the outcome of the general election.”