EUR/GBP seen at 0.86 in 6/12-month – Danske Bank
|Morten Helt, Senior Analyst at Danske Bank, believes the European cross could grind lower towards the 0.86 area in the medium to longer run.
Key Quotes
“EUR/GBP has dropped sharply following the hawkish rhetoric from the BoE as the market has priced in a high probability of a November rate hike”.
“We have lowered our EUR/GBP forecast as we now expect the BoE to deliver an ‘adjustment’ rate hike in November taking away the ‘emergency’ rate cut it delivered in August 2016 post the Brexit vote”.
“In the near term, we expect EUR/GBP to decline to 0.87 in 1-3M driven by slightly higher UK interest rates and GBP short covering. Longer term, we still see potential for a further decline in EUR/GBP driven by possible clarifications regarding the 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 now target 0.86 in 6- 12M (previously 0.90 in 6M and 0.88 in 12M)”.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.