EUR/GBP seen sidelined in the next months – Danske Bank

Senior Analyst at Danske Bank Morten Helt believes the European cross should stay within the 0.8650-0.900 in the next months.

Key Quotes

“In the near term, we expect relative rates, growth, UK politics and Brexit uncertainty to remain EUR/GBP positive. We have lifted our 1M and 3M forecast now targeting EUR/GBP at 0.90 in 1M (0.88) and 0.89 in 3M (0.88). Overall, we still expect EUR/GBP to trade within the 0.8650-0.90 range in coming months with risks skewed to the upside and Brexit uncertainty remaining a source of volatility”.

“Longer term, Brexit negotiations remain the key determinant for GBP and we still see potential for a decline in EUR/GBP driven by possible clarification on Brexit negotiations and valuations. However, with the ECB moving towards an exit as well and as relative growth is set to remain EUR/GBP positive, we see only modest downside potential in the year ahead. We target 0.87 in 6M and 0.86 in 12M”.