EUR/GBP: A 90s throwback - ING

With EUR/GBP having overshot ING’s 0.90 forecast for 3Q17, Viraj Patel, Research Analyst at ING expects it to remain above this level.

Key Quotes

“Unlike previous times when we have traded beyond this key horizontal level - namely during crisis episodes - there are now fundamental reasons to stay here; the diverging UK-Eurozone economic outlook - and widening interest-rate differentials - lend support to a higher EUR/GBP.”

“We prefer to see the recent move as an "overshoot" rather than a broader trend towards parity; risks that over exuberant EUR markets are front-running ECB QE tapering, as well as fading cliff-edge Brexit risks, limit the scope to which EUR/GBP can move materially beyond 0.90. Domestic and geopolitical uncertainties may see us trade in the 0.9000-0.9150 range in the near-term, with greater risks of a downside breakout.”