EUR/GBP: Twelve month target remains at 0.83 – Danske Bank
|The Bank of England is about to start tightening monetary policy, explained analysts at Danske Bank. They see the pound gaining ground on the back of the BoE and also from a positive USD environment.
Key Quotes:
“We expect the UK recovery to continue (e.g. payroll employment is now higher than pre-covid) although delta still creates uncertainty about the outlook. Also the bottlenecks are hitting the UK hard, as the UK is not only affected by the global bottlenecks but also bottlenecks created by Brexit.”
“Like the Fed, the Bank of England (BoE) is about to start tightening monetary policy. QE bond buying is set to end by the end of the year and markets are pricing in approximately two rate hikes before year-end 2022, which seems fair at the moment.”
“EUR/GBP has moved down to 0.85 since our last update and overall traded very narrowly within the 0.85-0.86 range. We still have a bullish view on GBP, as the USD-positive environment is usually also benefitting GBP.”
“We continue to target EUR/GBP at 0.83 in 12M. A risk to our forecast is a hit to global risk sentiment and/or if Bank of England keeps monetary policy accommodative for longer than currently expected. EU-UK tensions also remain a risk.”
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.