EUR/GBP seen around 0.83 in 12-month – Danske Bank

In view of Analysts at Danske Bank, the European cross is expected to drop to the 0.83 region within a year’s view.

Key Quotes

“GBP has been in the hands of the Brexit-deal driven UK cabinet turmoil lately. For GBP, the rising risk of both a soft Brexit (GBP positive) and a ‘no-deal’ Brexit (GBP negative)”.

“We still expect the Bank of England to hike the Bank rate by 25bp to 0.75% in August. This is not fully priced in the market yet (put at 75% probability), so we expect relative interest rates to drive EUR/GBP slightly lower to 0.87 in 1M (previously 0.88)”.

“Longer term, we still expect EUR/GBP eventually to trade lower driven by Brexit clarifications and fundamental valuations. We continue to target EUR/GBP at 0.8650 in 3M, 0.84 in 6M and 0.83 in 12M.