Morten Helt, Senior Analyst at Danske Bank, sees the European cross trading within 0.84 and 0.88 in the next months.
“Over the medium-term horizon, we still expect EUR/GBP to remain caught within the range of 0.84-0.88 but the cross to continue to trade with large fluctuations within the range”.
“We target EUR/GBP at 0.86 on a 6M-12M horizon, reflecting our expectation of the GBP stabilising somewhat in the slightly longer term on the attractive valuation of GBP-denominated assets, given the undervaluation of the UK currency”.
“Any turning point for the British currency would probably have to be driven by reduced uncertainty about the future agreement between the UK and the EU, which could entice foreign investors back to Britain. This could potentially take EUR/GBP down towards its fundamental equilibrium in coming years”.