EUR/GBP: Forecast at 0.90 over a full 12-month horizon - Danske Bank

Matías Salord FXStreet

Analysts at Danske Bank expect the EUR/GBP pair to trade sideways until more news arrives on the October Brexit process and a new Prime Minister has stepped up.

Key Quotes:

“EUR/GBP has met our expectation of moving to 0.90 on the back of non-Brexit news and we expect a little more upward drift this side of October. The driver of weakness in GBP has been a marked deterioration of UK data. There are some signs that expectations have now been adjusted.”

“We have started to see weakness in broad USD, which also helps limit EUR/GBP upside, and we expect European data to weaken ahead.”

The range of possible outcomes is likely to be 0.86 (if Brexit-related news improves markedly) to 0.91 (against expectation but if we see much weaker data and/or by pricing a higher probability of no-deal Brexit). We keep the forecast for the central scenario to be EUR/GBP at 0.90 over a full 12-month horizon. Towards year-end, the risk appears slightly skewed towards GBP strength and peak volatility, in our view.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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