EUR/GBP targets 0.86 in 12-month – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, expects the European cross to grind modestly lower to the 0.8600 handle within the next 12 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”.